Problem 7-2A Estimating and reporting bad debts LO P2, P3

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[The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year.

Cash sales	$	1,876,990
Credit sales	$	3,713,000

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

Accounts receivable	$	1,125,039	debit
Allowance for doubtful accounts	$	20,900	debit

Problem 7-2A Part 1

Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption.

1. Bad debts are estimated to be 3% of credit sales.
2. Bad debts are estimated to be 2% of total sales.
3. An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31). (Do not round intermediate calculations.)

Journal entry worksheet 1 2 3 A Bad debts are estimated to be 3% of credit sales. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Bad debts expense 86,460 Allowance for doubtful accounts 86,460 Record entry Clear entry View general journal Journal entry worksheet Bad debts are estimated to be 2% of total sales. Note: Enter debits before credits. Transaction General Journal Debit Credit b. Record entry Clear entry View general journal Journal entry worksheet 1 23 > An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. Note: Enter debits before credits. Transaction General Journal Debit Credit C. Record entry Clear entry View general journal