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Norma-Jean [14]
2 years ago
9

Problem 7-2A (Algo) Estimating and reporting bad debts LO P2, P3 Skip to question [The following information applies to the ques

tions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales $ 1,392,180 Credit sales $ 3,376,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 1,022,928 debit Allowance for doubtful accounts $ 22,240 debit Problem 7-2A (Algo) Part 1 Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. Bad debts are estimated to be 2% of credit sales. Bad debts are estimated to be 1% of total sales. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.
Business
1 answer:
sweet [91]2 years ago
4 0

Answer:

A. Dr Bad Debts Expense $67,520

Cr Allowance for doubtful accounts $67,520

B. Dr Bad Debts Expense $47,682

Cr Allowance for doubtful accounts $47,682

C. Dr Bad Debts Expense $73,386

Cr Allowance for doubtful accounts $73,386

Explanation:

A. Preparation of the adjusting entry to record bad debts if Bad debts are estimated to be 2% of credit sales

Dr Bad Debts Expense $67,520

Cr Allowance for doubtful accounts $67,520

(2% * $3,376,000)

(To record 2% of credit sales)

B. Preparation of the adjusting entry to record bad debts if Bad debts are estimated to be 1% of total sales

Dr Bad Debts Expense $47,682

Cr Allowance for doubtful accounts $47,682

[1% * ($ 1,392,180 + $3,376,000)]

(To record 1% of total sales )

C. Preparation of the adjusting entry to record bad debts if An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

Dr Bad Debts Expense $73,386

Cr Allowance for doubtful accounts $73,386

[$ 22,240 + (5% * $ 1,022,928)]

(To record 5% year-end uncollectible accounts receivable)

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fgiga [73]

Answer:

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6 0
3 years ago
The common stock of Jensen Shipping has an expected return of 16.2 percent. The return on the market is 11.2 percent, the inflat
tankabanditka [31]

Answer: 1.66

Explanation:

Based on the information given in the question, the beta of the stock will be calculated as follows:

Expected return = 16.2%

Market return = 11.2%

Inflation rate = 3.1%

Risk-free rate of return = 3.6%

We should note that:

Expected return = risk-free rate + Beta × (market rate- risk-free rate)

Therefore,

16.2% = 3.6% + Beta × (11.2% - 3.6%)

16.2% = 3.6% + Beta × 7.6%

16.2% - 3.6% = Beta × 7.6%

12.6% = Beta × 7.6%

Beta = 12.6% / 7.6%

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4 0
3 years ago
Read the passage. Then answer the question that follows. Nikia designs and produces board games that she sells online. She forme
liberstina [14]

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6 0
3 years ago
During a company's first year, the asset account, Office Supplies, was debited for $3,900 for the purchases of supplies. At year
fiasKO [112]

Answer:

The adjusting entry will be shown below:

Explanation:

The adjusting journal which is to be recorded in the following case will be:

Office Supplies expense A/c..............................Dr  $2,275

          Office Supplies A/c.........................................Cr   $2,275

As the amount $3,900 is already debited and at the year end, the remaining amount of office will be posted to the account of the office supplies expense against the office supplies account.

Working Note:

Amount = Debited amount of office supplies - Offices supplies on hand

= $3,900 - $1,625

= $2,275

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Suppose that a bank has loaned money to two businesses: a trustworthy computer manufacturer and a risky mining venture. Unfortun
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Answer:

The situation is called insolvency. insolvency is refer to the situation when debtor is unable return its debt.  The same is happened in the given situation. In the above case due to not paid by manufacturing unit, bank is unable to pay to depositor.

Insolvency is refer to that critical condition when debtor unable to pay amount to depositor. In the above given case even if bank want to sell its all assets it cannot cover its liabilities.Explanation:

8 0
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