Problem 7-2A (Algo) 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 $ 160,000 Credit sales $ 400,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable $ 120,000 debit Allowance for doubtful accounts $ 1,400 debit    An aging analysis estimates that 6% of year-end accounts receivable are uncollectible. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet.

I - A decrease in production will ordinarily result in an increase in fixed production cost per unit. II - Factory rent is included in manufacturing overhead, but office rent is a period cost. a. True, True b. False, True c. True, False d. False, False

Chapter 5: Receivables and Sales A company reports the following amounts at 12/31/YR2 (before any year-end adjustment). Management estimates 8% of the receivables will not be collectible. The company uses the percent-of-receivables method to determine bad debt expense. Credit sales for the year 1,000,000 Accounts receiyable (A/R) 90,000 Allowance for uncollectible accounts ("AUA") 1,800 Credit Bal. Estimated percent uncollectible. 6.0% Create T accounts for A/R, AUA and Bad debt expense to help with the following questions. Accounts Receivable AUA Bad Debt Expense How much of the Accounts Receivable does management not expect to collect? What amount will the company record as bad debt expense for the YR2? What amount will be shown on the 12/31 balance sheet for Net Accounts Receivable? 1 2 3 On January 5, YR3, the company writes off an A/R they determined is uncollectible. After the write off, what is the balance in AUA? The 4 amount of the write-off is: 200 After the write off, what…

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Mc Graw Hill Required information [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. $ 400,000 $ 1,000,000 Cash sales Credit sales In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 3% of credit sales. b. Bad debts are estimated to be 2% of total sales. c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31). View transaction list

Recording Entries to Estimate Bad Debt Expense Including the Write-Off and Subsequent Collection of an Account Following are accounts of Long Company at its December 31 year-end for the current year. $25,500 Accounts receivable balance, December 31, prior year Allowance for doubtful accounts balance, December 31, prior year Total sales revenue during the current year (1/6 are on credit) Uncollectible account written off during the current year (A. Smith) Cash collected on accounts receivable during the current year 1,500 480,000 500 85,000 Required Recording Write-off b. Prepare the entry to record bad debt expense for each of the following three cases. • Note: Treat each case separately. 1. Bad debt losses assume 1% of credit sales. Date Dec. 31 Bad Debt Expense Allowance for Doubtful Accounts To record bad debt Recording Bad Debt Expense Account Name Date Dec. 31 Bad Debt Expense Age Less than 30 days 31-90 days Account Name Allowance for Doubtful Accounts To record bad debt 91-120…

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