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At December 31, 2017, Hawke Company reports the following results for its calendar year.
| | | | |
| Cash sales | $ | 1,747,460 | |
| Credit sales | | 2,951,000 | |
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In addition, its unadjusted trial balance includes the following items.
| | | | |
| Accounts receivable | $ | 894,153 | debit |
| Allowance for doubtful accounts | | 13,640 | debit |
|
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 4% of credit sales.
b. Bad debts are estimated to be 3% of total sales.
c. An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.
Adjusting entries (all dated December 31, 2017).
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