1) Selected accounts of Bluefield Company are shown below as of October 31 of the current year.

before any adjusting entries have been made. Bluefield's accounting year begins October 1.

debit credit

Supplies $9,000

Prepaid insurance 3,000

Office furniture 7,680

Unearned service fees $3,000

Interest income 1,300

Use the following information to prepare the necessary October 31 adjusting entries: (10 points)

(1) October 31 supplies on hand total $3,000.

(2) Prepaid insurance represents insurance coverage purchased for a two-year period starting

October 1 of the current year.

(3) The office furniture is expected to last 8 years.

(4) Last month the firm received $3,000 of service fees in advance. One-third of these fees were

earned in October.

2) Hanover Shoes' sales totaled $9,500,000 for 2013. Information concerning Hanover's gross profit

under three inventory costing methods follows:

FIFO

$825,000

LIFO

$860,000

Weighted average

$820,000

Compute the gross profit percentage for each costing method. Which method shows the highest

gross profit? (3 points)

3) Likert Co. reports the following in its 2013 annual report (amounts in thousands): (4 points)

2013 2012 2011

Sales $5,298,668 $5,132,768 $4,946,716

Accounts receivable 625,425 745,217 565.546

Calculate the accounts receivable turnover and average collection period for 2013 and 2012.

4) Monroe Company has $3,000,000 in credit sales during 2014. The beginning balance of

the allowance for doubtful accounts is $30,000 and the company writes off $7,000 in bad

debts during the year. (9 points)

a. Determine the estimated amount needed in the allowance for doubtful accounts using

the aging of accounts receivable method, given that $1,600,000 of receivables are

current (estimated that 0.5% are uncollectible), $349,000 are 1-60 days late (estimated

that 1.25% are uncollectible) and $52,000 are over 60 days late (estimated that 50% are

uncollectible).

b. Using the aging of accounts method and your calculation from part a., provide the

necessary journal entry to record bad debt expense and adjust the allowance for

uncollectible accounts to the necessary balance.