The preparation of the adjusting entries to record bad debts for Hawke Company under each separate assumption are as follows:
A) Bad Debts $169,790 Allowance for Doubtful Accounts $169,790
B) Bad Debts $189,173 Allowance for Doubtful Accounts $189,173
C) Bad Debts $102,935 Allowance for Doubtful Accounts $102,935
<h3>Data and Calculations:</h3>
A) Allowance for doubtful accounts = $142,320 ($3,558,000 x 4%)
Bad Debts Expense = $169,790 ($142,320 + $27,470)
B) Allowance for doubtful accounts = $161,703 ($3,558,000+ $1,832,100 x 3%)
Bad Debts Expense = $189,173 ($161,703 + $27,470)
C) Allowance for doubtful accounts = $75,465 ($1,078,074 x 7%)
Bad Debts Expense = $102,935 ($75,465 + $27,470)
<h3>Question Completion:</h3>
On December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales
$1,832 100 $3,558,000
In addition, its unadjusted trial balance includes the following items. Accounts receivable $1.078.074 debit
Allowance for doubtful accounts $27,470 debit.
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