accounting homework

Spring2017 ACCT301-01 Exam2 Extra Name: __________________________ Points: ____/20

Note: Up to 20 points will be added to Exam 2 for a total not to exceed 108 points. Due: Final exam day

1. Gross profit method. Utley Co. prepares monthly income statements. Inventory is counted only at year end; thus, month-end inventories must be estimated. All sales are made on account. The rate of mark-up on cost is 20%. The following information relates to the month of May.

Instructions Calculate the estimated cost of the inventory on May 31.

2. Entries for bad debt expense. A trial balance before adjustment included the following:

Give journal entries assuming that the estimate of uncollectibles is determined by taking (1) 5% of gross accounts receivable and (2) 1% of net sales.

Page 1

Inventory, May 1 45,000 Purchases during May 58,000

Accounts receivable, May 1 $21,000

Debit Credit Accounts receivable $120,000 Allowance for doubtful accounts 730 Sales $510,000 Sales returns and allowances 8,000

Accounts receivable, May 31 15,000 Collections of accounts during May 96,000