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