Problem 7-2A 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	$	1,747,460
Credit sales		2,951,000

In addition, its unadjusted trial balance includes the following items.

Accounts receivable	$	894,153	debit
Allowance for doubtful accounts		13,640	debit

Problem 7-2A Part 1

Required: 1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.

Bad debts are estimated to be 4% of credit sales.

Bad debts are estimated to be 3% of total sales.

An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31, 2017).

Problem 7-2A 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 7-2A 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.