BProblemsChapter 5 - Problem 5-1 Sale Method Jan Feb Mar...

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Problem 5-1 Sale Method Jan. Feb. Mar. April May June Sales ......................................................................................................................................................................................... $12,000 $ 8,000 $13,000 $11,000 $9,000 $13,500 Cost of goods sold .................................................................................................................................................................... 7,800 5,200 8,450 7,150 5,850 8,775 Gross margin ............................................................................................................................................................................ $ 4,200 $2,800 $ 4,550 $ 3,850 $3,150 $ 4,725 Installment Method Jan. Feb. Mar. April May June Sales ......................................................................................................................................................................................... $11,000 $10,000 $11,500 $10,500 $10,500 $9,500 Cost of goods sold .................................................................................................................................................................... 7,150 6,500 7,475 6,825 6,825 6,175 $ 3,850 $ 3,500 $ 4,025 $ 3,675 $ 3,675 $3,325 Problem 5-2 Completed Contract Percentage of Completion This Year Next Year This Year Next Year Income excluding motel (000) ................................................................................................................................................. $1,250 $1,250 $1,250 $1,250 Income from motel project ....................................................................................................................................................... 0 750 450 300 Income before taxes ................................................................................................................................................................. $1,250 $2,000 $1,700 $1,550 Problem 5-4 The Allowance for Doubtful Accounts should have a balance of $51,750 on December 31. The supporting calculations are shown below: Days Account Outstanding Amount Expected Percentage Uncollectible * Estimated Uncollectible 0-15 days $450,000 .01 $ 4,500 16-30 days 150,000 .06 9,000 31-45 days 75,000 .20 15,000 46-60 days 45,000 .35 15,750 61-75 15,000 .50 7,500 Balance for Allowance for Doubtful Accounts $51,750 The accounts that have been outstanding over 75 days ($15,000) and have zero probability of collection would be written off immediately and not be considered when determining the proper amount of the Allowance for Doubtful Accounts.
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