Required information
Problem 9-2A Estimating and reporting bad debts LO P2, P3
[The following information applies to the questions displayed below.]
At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales $ 1,305,010 Credit sales 3,261,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable $ 988,083 debit Allowance for doubtful accounts 16,930 debit
Problem 9-2A Part 1
Required:
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.
a. Bad debts are estimated to be 2% of credit sales.
b. Bad debts are estimated to be 1% of total sales.
c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.
Adjusting entries (all dated December 31, 2017).
Problem 9-2A Part 2
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.
Problem 9-2A Part 3
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.
Required information
Problem 9-2A Estimating and reporting bad debts LO P2, P3
[The following information applies to the questions displayed below.]
At December 31, 2017, Hawke Company reports the following results for its calendar year.
Cash sales | $ | 1,305,010 | |
Credit sales | 3,261,000 | ||
In addition, its unadjusted trial balance includes the following items.
Accounts receivable | $ | 988,083 | debit |
Allowance for doubtful accounts | 16,930 | debit | |
Problem 9-2A Part 1
Required:
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.
a. Bad debts are estimated to be 2% of credit sales.
b. Bad debts are estimated to be 1% of total sales.
c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.
Adjusting entries (all dated December 31, 2017).
Problem 9-2A Part 2
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.
Problem 9-2A Part 3
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1c.