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At December 31, 2013, HawkeCompany reports the following results for its calendar year.

Cash sales $ 1,905,000
Credit sales 5,682,000

In addition, its unadjustedtrial balance includes the following items.

Accountsreceivable $ 1,270,100 debit
Allowance fordoubtful accounts 16,580 debit
Required:
1.

Prepare the adjusting entry for this company to recognize baddebts under each of the following independent assumptions.

a. Bad debts are estimated to be1.5% of credit sales.
b. Bad debts are estimated to be 1%of total sales.
c. An aging analysis estimates that5% of year-end accounts receivable are uncollectible.

Adjusting entries (all datedDecember 31, 2013).
2.

Show how Accounts Receivable and the Allowance for DoubtfulAccounts appear on its December 31, 2013, balance sheet given thefacts in part 1a.
3.

Show how Accounts Receivable and the Allowance for DoubtfulAccounts appear on its December 31, 2013, balance sheet given thefacts in part 1c.

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Hubert Koch
Hubert KochLv2
28 Sep 2019

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Related questions


At December 31, 2009, Vizarro Company reports the following resultsfor its calendar-year.
Problem 9-3A
Estimating and reporting bad
debts
P1 P2
Cash sales . . . . . . . . . $2,184,700
Credit sales . . . . . . . . 3,720,000
Accounts receivable . . . . . . . . . . . . . . . . . $1,127,500debit
Allowance for doubtful accounts . . . . . . . . 29,030 debit
Check Bad Debts Expense:
(1a) $55,800, (1c) $62,855
In addition, its unadjusted trial balance includes the followingitems.
Required
1. Prepare the adjusting entry for Vizarro Co. to recognize baddebts under each of the following inde-
pendent assumptions.
a. Bad debts are estimated to be 1.5% of credit sales.
b. Bad debts are estimated to be 1% of total sales.
c. An aging analysis estimates that 3% of year-end accountsreceivable are uncollectible.
2. Show how Accounts Receivable and the Allowance for DoubtfulAccounts appear on its December31,
2009, balance sheet given the facts in part 1a.
3. Show how Accounts Receivable and the Allowance for DoubtfulAccounts appear on its December31,
2009, balance sheet given the facts in part 1c.

P1 - Apply the direct write-off and allowance methods to ac-
count for accounts receivable. The direct write-off method
charges Bad Debts Expense when accounts are written off asun-
collectible. This method is acceptable only when the amount ofbad
debts expense is immaterial. Under the allowance method, bad
debts expense is recorded with an adjustment at the end ofeach
accounting period that debits the Bad Debts Expense accountand
credits the Allowance for Doubtful Accounts. Theuncollectible
accounts are later written off with a debit to the Allowancefor
Doubtful Accounts.
P2 - Estimate uncollectibles using methods based on sales and
accounts receivable. Uncollectibles are estimated by focus-
ing on either (1) the income statement relation between baddebts
expense and credit sales or (2) the balance sheet relationbetween
accounts receivable and the allowance for doubtful accounts.The
first approach emphasizes the matching principle using theincome
statement. The second approach emphasizes realizable value of
accounts receivable using the balance sheet.

I

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.

The following selected amounts are reported on the year-endunadjusted trial balance report for a company that uses the percentof sales method to determine its bad debts expense. Accountsreceivable $ 430,000 Debit Allowance for Doubtful Accounts 1,400Debit Net Sales 2,250,000 Credit All sales are made on credit.Based on past experience, the company estimates 1.0% of creditsales to be uncollectible. What adjusting entry should the companymake at the end of the current year to record its estimated baddebts expense? Multiple Choice Debit Bad Debts Expense $5,700;credit Allowance for Doubtful Accounts $5,700. Debit Bad DebtsExpense $22,500; credit Allowance for Doubtful Accounts $22,500.Debit Bad Debts Expense $23,900; credit Allowance for DoubtfulAccounts $23,900. Debit Bad Debts Expense $4,300; credit Allowancefor Doubtful Accounts $4,300. Debit Bad Debts Expense $21,100;credit Allowance for Doubtful Accounts $21,100.

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