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Problem 9-2A (Algo) Estimating and reporting bad debts LO P2, P3

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At December 31, Hawke Company reports the following results for its calendar year.

Cash sales	$ 220,000
Credit sales	$ 550,000

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

Accounts receivable	$ 495,000	debit
Allowance for doubtful accounts	$ 4,000	debit

Problem 9-2A (Algo) Part 1

Required:

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

1. Bad debts are estimated to be 4% of credit sales.
2. Bad debts are estimated to be 3% of total sales.
3. An aging analysis estimates that 4% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31).

Problem 9-2A (Algo) Part 2

2. Bad debts are estimated to be 4% of credit sales. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet.

Problem 9-2A (Algo) Part 2

2. Bad debts are estimated to be 4% of credit sales. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet.

Problem 9-2A (Algo) Part 3

3. An aging analysis estimates that 4% of year-end accounts receivable are uncollectible. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet.