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Hahn Company Uses the Percentage of Sales Method for Recording

question 93

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Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense? Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $500,000 and credit sales are $2,000,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

Recognize the impact of purchase discounts, sales discounts, and credit card sales on financial statements.
Identify and understand various types of inventory costs, including freight-in and the limitation of cost to purchase price less discounts.
Comprehend the role of customer and trade discounts in merchandising transactions.
Realize the financial representation of sales tax in sales transactions.

Definitions:

Straight-Line Method

A depreciation technique where an equal amount of depreciation expense is allocated for each year of the asset's useful life.

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