Required information
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At December 31, 2017, Hawke Company reports the following results for its calendar year.
|
Cash sales |
$ |
1,244,440 |
Credit sales |
3,331,000 |
|
In addition, its unadjusted trial balance includes the following items.
|
Accounts receivable |
$ |
1,009,293 |
debit |
Allowance for doubtful accounts |
20,560 |
debit |
|
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 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.
Adjusting entries (all dated December 31, 2017).
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Days Past Due 1 to 30 $95,000 Total 0 31 to 60 61 to 90 Over 90 $595,000 $401,000 $41,000 $23,000 $35,000 Accounts receivable 39 4% 79 99 128 Percent uncollectible a. Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method. b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $4,100 credit c. Prepare the adjusting entry to record bad debts expense using the estimate from part a. Assume the unadjusted balance in the Allowance for Doubtful Accounts is a $600 debit. Complete this question by entering your answers in the tabs below. Reg A Req B and C Complete the below table to calculate the estimated balance of Allowance for Doubtful Accounts using the aging of accounts receivable method Accounts Receivable Percent Uncollectible (%) Not due: X = 1 to 30: X 31 to 60: X 61 to 90 X Over 90: X Estimated balance of allowance for uncollectibles Reg A Req B and C Mayfair Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Zisa or Access. Zisa deducts a 3.5% service charge for sales on its credit card. Access deducts a 2.5% service charge for sales on its card Mayfair completes the following transactions in June. 4 S omerchandise on credit (that had cost $240) to Natara Morris. Sold $600 June their zisa cards to customers who used their Access cards 6 Sold $5,866 of merchandise (that had cost $2,346) 8 Sold $4,950 of merchandise (that had cost $1,980) to customers who used their Access cards 13 Wrote off the account of Abigail McKee against the Allowance for Doubtful Accounts. The $615 balance in Mc Kee's account stemmed from a credit sale in October of last year. 18 Received Morris's check in full payment for the purchase of June 4 Required: Prepare journal entries to record the preceding transactions and events. (The company uses the perpetual inventory system.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 6 7 9 10 1 Sold $600 of merchandise on credit to Natara Morris. Note: Enter debits before credits. General Journal Date Debit Credit June 04 Record entry View general journal Clear entry View transaction list Journal entry worksheet 2 3 1 Bad debts are estimated to be 2% of credit sales. Note: Enter debits before credits. General Journal Transaction Debit Credit a. Record entry Clear entry View general journal 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 S 0 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: