BProblemsChapter 5

# 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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