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Quiz 02: RECEIVABLE and ESTIMATED UNCOLLECTIBLE ACCOUNTS

1. Herald Corp. had the following information relating to its accounts


receivable:
Accounts receivable, December 31, 2018 1,950,000
Credit sales 8,100,000
Collections from customers 7,125,000
Accounts written-off 187,500
Estimated uncollectible receivable per aging 247,500
In the December 31, 2018 statement of financial position, what is the net
realizable value of the receivable?

2. On December 31, 2018, the “Receivable” account of Con Company shows a


net realizable value of P 1,950,000. Subsidiary details shows the following:
Trade accounts receivable 775,000
Trade notes receivable 100,000
Installment receivable, normally due 1 year to 2 years 300,000
Customers’ account reporting credit balances arising
from sales return 30,000
Advance payments for purchase of merchandise 150,000
Customers’ accounts reporting credit balances arising
from advance payments 20,000
Cash advances to subsidiary 400,000
Claims against insurance company 15,000
Subscription receivable due in 60 days 300,000
Accrued interest receivable 10,000
How much should be presented as “trade receivable”?

3. The following data were taken from the records of Millet Corporation for the
year ended December 31, 2018:
Sales on account 7,200,000
Accounts receivables written off 50,000
Notes receivable to settle accounts 800,000
Purchases on account 7,800,000
Payments to creditors 6,400,000
Purchase discounts 520,000
Sales returns 30,000
Collections received to settle accounts 4,900,000
Notes given to settle accounts 500,000
Purchase returns 140,000
Payments of notes 200,000
Discounts taken by customers 80,000
Collection on notes receivable 360,000
What is the carrying value of the accounts receivable on December 31,
2018?

4. On May 9, 2018, Paul Corp. sold merchandise with a list price of P 150,000 to
Camry on account. Paul allowed trade discounts of 30% and 20%. Credit
terms were 2/15, n/40 and the sale was made FOB shipping point. Paul
prepaid P 6,000 of delivery cost for Camry as an accommodation. What
amount should Camry remit to Paul as full payment on May 24, 2018?

5. On June 1, 2018. Thomas Corp. sold merchandise with a list price of P 300,000
to Peter Co. on account. Peter was given the following trade discounts of
30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB
destination. On June 10, 2018, when the merchandise were delivered. Peter
Co. paid P 5,000 of delivery costs for Thomas as an accommodation. What
amount should Peter Co. remit to Thomas Co. as full payment on June 4,
2018?

6. The statement of financial position of Middle Corp. shows the accounts


receivable balance at December 31, 2017 as follows:
Accounts receivable 450,000
Allowance for bad debts 9,000
During 2018, transactions relating to the accounts were as follows:
Sales on account 4,800,000
Cash received from collections of current receivable
after discounts of P 80,000 were allowed for
prompt payment 3,920,000
Bad accounts previously written off prior to 2017 were
recovered 5,000
Customers’ accounts were ascertained to be
worthless and were written-off 20,000
The company decided to provide an amount for
doubtful accounts by a journal entry at the end
of the year 23,000
Accounts receivable of P 700,000 has been pledged to a local bank on a
loan of P 400,000. Collections of P 150,000 were made on these receivable
(not included in the collections previously given) and applied as partial
payment to the loan.

How much is the estimated realizable value of accounts receivable at


December 31, 2018?

7. Bake Co. has the following account balances at December 31, 2018:
Accounts receivable 900,000
Allowance for doubtful accounts (before any
provision for 2018 doubtful accounts expense) 16,000
Credit sales for 2018 1,750,000
Bake is considering the following methods of estimating doubtful accounts
expense for 2018:
 Based on credit sales of 2%
 Based on accounts receivable at 5%
What amount should Bake charge to doubtful accounts expense under
each method?

8. Index Co. showed the following information related to the accounts


receivable in order to estimated bad debts through the use of the aging. The
credit period of the company is 30 days on the average.
Age of Receivables Amount
Under 30 days 4,000,000
31 – 60 days 1,500,000
61 – 90 days 1,000,000
91 – 120 days 500,000
121 – 150 days 200,000
151 – 180 days 100,000
The company based on experience has the following percent of
collectability:
Accounts which are overdue for less than 30 days 97%
Accounts which are overdue 31 – 60 days 90%
Accounts which are overdue 61 – 90 days 75%
Accounts which are overdue 91 – 120 days 55%
Accounts which are overdue 121 – 150 days 30%
Accounts which are overdue for over 150 days 25%
What is the net realizable value of accounts receivable?

9. Pearl Co. began operations on January 1, 2017. On December 31, 2017, Pearl
provided for uncollectible accounts based on 1% of annual credit sales. On
January 1, 2018, Pearl changed its method of determining its allowance for
uncollectible accounts by applying certain percentage to the accounts
receivable aging as follows:
Days past invoice date % deemed to be uncollectible
0 – 30 1%
31 – 90 5%
91 – 180 20%
Over 180 80%
In addition, Pear wrote off all accounts receivable that were over 1 year old.
The following additional information relate to the years ended December 31,
2017 and 2018:
2018 2017
Credit sales 6,000,000 5,600,000
Collection 5,830,000 4,800,000
Accounts written off 54,000 None
Recovery of accounts previously written off 14,000 None

Days past invoice date at December 31


0 – 30 600,000 500,000
31 – 90 160,000 180,000
91 – 180 120,000 90,000
Over 180 50,000 30,000
What is the provision for uncollectible accounts for the year ended
December 31, 2018?