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PROBLEM 1

The December 31, 2017 statement of financial position of


the UPAT COMPANY included the following information:

Accounts Receivable P672,000


Less: Allowance for bad debts (42,300) P629,700
Notes Receivable* __65,400
Total Receivables P695,100

*The company is contingently liable for discounted notes


receivable of P114,000.

During the year ending December 31, 2017, the following


transactions occurred:

1. Sales on Credit P2,623,800


2. Collections of accounts receivable 2,523,000
3. Accounts receivable written off as 41,400
uncollectible
4. Notes receivable collected 87,000
5. Customer notes received in payment
of accounts receivable 216,000
6. Notes receivable discounted that
were paid at maturity 108,000
7. Notes receivable discounted that
were defaulted, including interest
of P60 and a P15 fee. This amount
is expected to be collected during
2015 6,075
8. Proceeds from customer notes discounted
with recourse (principal P135,000,
accrued interest, P600) 135,225
9. Collections on accounts previously
written off 1,500
10. Sales returns and allowances (on credit
sales) 6,000
11. Bad debts were estimated to be 1.5% of
credit sales

Based on the preceding information, determine the


balances of the following accounts at December 2018.

1. Accounts Receivable
A. P515,475 C. P473,718
B. P513,975 D. P509,400
2. Allowance for doubtful accounts
A. P39,375 C. P40,857
B. P41, 757 D. P40,800

3. Notes Receivable
A. P59,400 C. P329,400
B. P200,400 D. P194,400

4. Notes Receivable Discounted


A. P135,000 C. P129,000
B. P114,000 D. P120,000

PROBLEM 2

Presented below are unrelated situations. Answer the


questions relating to each situation.

1. The following information is from GUMAMELA CORP’s


first year of operations:

Merchandise purchased P450,000


Ending merchandise inventory 123,000
Collections from customers 150,000
All sales are on account and goods
sell at 30% above cost.

What is the accounts receivable balance at the end of


the company’s first year of operations?

2. BANABA CO. reported the following information at the


end of its first year of operations, December 31,
2018:

Bad debt expense for 2018 P271,000


Uncollectible accounts written
off during 2018 35,400
Net realisable value of accounts
receivable 895,000

What is the accounts receivable balance at December


31, 2018?

3. SUNFLOWER COMPANY sells a variety of imported goods.


By selling on credit, Sunflower cannot expect to
collect 100% of its accounts receivable. At December
31, 2017, Sunflower reported the following in its
statement of financial position:
Accounts Receivable P2,197,500
Less: Allowance for bad debts (133,500)
Accounts receivable, net P2,064,000

During the year ended December 31, 2018, Sunflower


earned sales revenue of P537,702,500 and collected
cash of P528,070,500 from customers. Assume bad debt
expense for the year was 1% of sales revenue and that
Sunflower wrote off uncollectible accounts receivable
totalling P5,439,500.

A. What is the accounts receivable balance at December


31, 2018?
B. What is the December 31, 2018 balance of the
Allowance for Bad Debts account?

4. The following information pertains to ACACIA, INC for


the year ended December 31, 2018:

Credit sales during 2018 P4,450,000


Collection of accounts written
off in prior periods 170,000
Worthless accounts written off
in 2018 191,000
Allowance for doubtful accounts,
January 1, 2018 155,000

Acacia, Inc provides for doubtful accounts based on 1


½% of credit sales.

What is the balance of the allowance for doubtful


accounts at December 31, 2018?

5. MAHOGANY COMPANY’S analysis and ageing of its accounts


receivable at December 31, 2018 disclosed the
following:

Accounts receivable P460,000


Accounts estimated to be
uncollectible (per raging) 95,000
Allowance for bad debts (per books) 103,000

What is the net realisable value of Mahogany’s


receivables at December 31, 2018?
6. The following amounts are shown on the 2018 and 2017
financial statements of SAN FRANCISCO CO.:

2018 2017
Accounts receivable ? P470,000
Allowance for bad debts 20,000 10,000
Net sales 2,6000,000 2,400,000
Cost of goods sold 1,900,000 1,752,000

San Francisco Co’s accounts receivable turnover for


2018 is 6.5 times.

What is the accounts receivable balance at December


31, 2018?

7. The policy of ILANG-ILANG INC is to debit bad debt


expense for 3% of all new sales. The following are
the company’s sales and allowance for bad debts for
the past four years.

Allowance for Bad Debts


Year Sales Year-End Balance
2015 P3,000,000 P45,000
2016 P2,950,000 P56,000
2017 P3,120,000 P60,000
2018 P2,420,000 P75,000

What are the amounts of accounts written off in 2016,


2017 and 2018?

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