Activity 2_ Receivables

1. Vic Vivar started business on January 1, 2019. His ledger on December 31, 2019 among others showed:
Accounts receivable P125,650
Sales 367,280
Sales returns and allowances 3,180

Bad debts provided for 2019 was 3% of net sales. During 2020, sales amounted P460,700 out of which P3,700
were returned by the customers. Cash received from customers amounted to P235,112.50, of which P132,112.50,
after 2-1/2 percent discount, pertains to 2020 sales.
Of the 2019 accounts, P1,500 are worthless.
Bad debts provision for 2020 is 2% of net sales.

Required: all entries should have explanation (To record sales computed as follows:. Etc.)

a) Entries to record sales in 2019, including its subsequent collection.

b) Entry to record the allowance for bad debts on December 31, 2019.
c) Entries to record sales in 2020, including collection of previous and current receivables.
d) Entry to record the write-off of worthless accounts.
e) Entry to record the allowance for bad debts on December 31, 2020.
f) How much is net sales for the year 2020?
g) How much is net realizable value of the accounts receivable on December 31, 2020?

2. Gus received from a customer a one-year, P375,000 note bearing annual interest of 8%. After holding the note
for six months, Gus discounted the note at Platinum Bank at an effective rate of 10%. If the discounting is treated
as a sale, what amount of loss on discounting should Gus recognize?

3. On December 1, 2019, Matilda Company assigned on a non-notification basis accounts receivable of P3,000,000
to a bank in consideration for a loan of 80% of the receivables less a 5% service fee on the accounts assigned. The
interest rate of the loan is 12% per annum. The company collected assigned accounts of P2,000,000 and remitted
the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and
the balance to the principal. The interest rate is 1% per month on the outstanding balance of the loan.

In its December 31, 2019 balance sheet, what amount of note payable should Matilda report as current liability?

4. Matt Corporation had a specific receivable from a customer in the amount of P600,000 as of December 31, 2019.
During 2020, the customer informed Matt Corporation that servicing of its payable will be made once there is
significant improvement in their financial capabilities. Since there are no available historical data relating to
similar borrowers, Matt Corporation uses its experienced judgment to estimate the amount of impairment loss.
Reasonable estimate revealed that the fair value of the receivable as of December 31, 2020 represents 40% of the
outstanding receivable.

What amount of impairment loss on its receivable should Matt report for 2020?
Instruction: Write in your own handwriting using a 10-12 column worksheet if you have any or intermediate
paper. Use black/blue ballpen. Show solutions in good accounting form. All amounts should be captioned, no
abbreviations. Submit a picture of your work by turning it in. Make sure that it is properly and clearly captured
(not upside down, portrait orientation) Remember to solve it on your own, it is ungraded but part of formative
assessment (10%).