Required information Problem 7-2A (Algo) Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 50,000 Credit sales $ 125,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts $ 112,500 debit $ 900 debit Problem 7-2A (Algo) Part 1 Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. 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 4% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31). View transaction list Journal entry worksheet Bad debts are estimated to be 4% of credit sales. Note: Enter debits before credits. General Journal Debit Credit Date December 31 Record entry Clear entry View general journal