Question
In: Accounting
Problem 9-2A Estimating and reporting bad debts LO P2, P3
Problem 9-2A Estimating and reporting bad debts LO P2, P3
At December 31, 2017, Hawke Company reports the following results for its calendar year.
| Cash sales | $ | 2,129,230 | |
| Credit sales | 3,122,000 | ||
In addition, its unadjusted trial balance includes the following items.
| Accounts receivable | $ | 945,966 | debit |
| Allowance for doubtful accounts | 12,520 | debit | |
Problem 9-2A 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 3% of credit sales.
Bad debts are estimated to be 2% of total sales.
An aging analysis estimates that 6% of year-end accounts receivable are uncollectible.
Adjusting entries (all dated December 31, 2017).
Problem 9-2A 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 9-2A 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.
Solutions
Expert Solution
1. Prepare the adjusting entry for this company to recognize bad debts under each of the following independent assumptions.
a)
| Date | account and explanation | debit | credit |
| Dec 31 | Bad debt expense (3122000*3%) | 93660 | |
| Allowance for doubtful accounts | 93660 | ||
| (To record adjusting entry) |
b)
| Date | account and explanation | debit | credit |
| Dec 31 | Bad debt expense (5251230*2%) | 105024.60 | |
| Allowance for doubtful accounts | 105024.60 | ||
| (To record adjusting entry) |
c)
| Date | account and explanation | debit | credit |
| Dec 31 | Bad debt expense (945966*6%+12520) | 69277.96 | |
| Allowance for doubtful accounts | 69277.96 | ||
| (To record adjusting entry) |
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.
| Current assets | ||
| Account receivable | 945966 | |
| Less: Allowance for doubtful accounts (93660-12520) | -81140 | 864826 |
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
| Current assets | ||
| Account receivable | 945966 | |
| Less: Allowance for doubtful accounts | -56757.96 | 889208.04 |
ekkarill92 answered 2 years agoRelated Solutions
Required information Problem 9-2A Estimating and reporting bad debts LO P2, P3 [The following information applies...
Required information
Problem 9-2A 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
$
1,777,560
Credit sales
$
2,989,000
In addition, its unadjusted trial balance includes the following
items.
Accounts receivable
$
905,667
debit
Allowance for doubtful accounts
$
11,710
debit
Problem 9-2A Part 1
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Problem 7-2A Estimating and reporting bad debts LO P2, P3 [The following information applies to the...
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
$
2,185,820
Credit sales
3,998,000
In addition, its unadjusted trial balance includes the following
items.
Accounts receivable
$
1,211,394
debit
Allowance for doubtful accounts
25,160
debit
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to recognize bad debts under each of the following independent
assumptions....
Required information Problem 7-2A Estimating and reporting bad debts LO P2, P3 [The following information applies...
Required information
Problem 7-2A 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
$
2,197,110
Credit sales
$
2,971,000
In addition, its unadjusted trial balance includes the following
items.
Accounts receivable
$
900,213
debit
Allowance for doubtful accounts
$
11,130
debit
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2016
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Wrote off $20,900 of uncollectible accounts receivable.
Received $665,400 cash in payment of accounts receivable.
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These transactions are summarized as follows.
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Retained
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$
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Cost of goods sold
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$
0
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Cost of good available for sale
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Sales (80,000 units × $45 per unit)
$
3,600,000
Cost of goods sold
Beginning inventory
$
0
Cost of goods manufactured (100,000 units × $25 per unit)
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Cost of goods available for sale
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$
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Paid-in capital in excess of par
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Retained earnings
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