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Accounting

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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 $ 112,500 debit
Allowance for doubtful accounts $ 900 debit

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).

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