Problem 9- 3A Estimating and reporting bad debts P2 At December 31, 2013, Hawke Company reports the following results for

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Problem 9- 3A Estimating and reporting bad debts P2 At December 31, 2013, Hawke Company reports the following results for its calendar year.
Cash sales . . . . . . . . . . $ 1,905,000
Credit sales . . . . . . . . . 5,682,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable . . . . . . . . . . . . . . . . . . . $ 1,270,100 debit
Allowance for doubtful accounts . . . . . . . . . 16,580 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 1.5% 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.
2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2013, balance sheet given the facts in part 1a.
3. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2013, balance sheet given the facts in part 1c.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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Fundamental accounting principle

ISBN: 978-0078025587

21st edition

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

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Question Posted: November 26, 2013 09:33:07