Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

600

units

@ $40 per unit

Feb.

10

Purchase

360

units

@ $37 per unit

Mar.

13

Purchase

150

units

@ $25 per unit

Mar.

15

Sales

765

units

@ $80 per unit

Aug.

21

Purchase

200

units

@ $45 per unit

Sept.

5

Purchase

580

units

@ $42 per unit

Sept.

10

Sales

780

units

@ $80 per unit

Totals

1,890

units

1,545

units

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

5. The companys manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

multiple choice

• Weighted Average

• LIFO

• FIFO

• Specific Identification

At December 31, Hawke Company reports the following results for its calendar year.

Cash sales	$	2,067,020
Credit sales	$	3,976,000

In addition, its unadjusted trial balance includes the following items.

Accounts receivable	$	1,204,728	debit
Allowance for doubtful accounts	$	19,020	debit

Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption.

a. Bad debts are estimated to be 2% of credit sales.

b. Bad debts are estimated to be 1% of total sales.

c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible.

Adjusting entries (all dated December 31). (Do not round intermediate calculations.)

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet given the facts in part 1a.

FIFO LIFO Weighted Average Specific Identification Sales Less: Cost of goods sold Gross profit $ 0 $ 0 $ 0 $ 0 1 2 3 Bad debts are estimated to be 2% of credit sales. Note: Enter debits before credits. Transaction General Journal Debit Credit .