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Problem - At December 31, Hawke Company reports the following results for its calendar year.
Cash sales $1,219,730
Credit sales $2,893,000
In addition, its unadjusted trial balance includes the following items.
Accounts receivable $876,579 debit
Allowance for doubtful accounts $27,110 debit
Required - Prepare the adjusting entry to record bad debts under each separate assumption.
a. Bad debts are estimated to be 4% of credit sales.
b. Bad debts are estimated to be 3% of total sales.
c. An aging analysis estimates that 7% of year-end accounts receivable are uncollectible.
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