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Receivables Problem 5

Accounts receivable balances and allowance for doubtful accounts are given for Word Company. Calculations show uncollectible expense of P30,000 and allowance of P37,000 for 2019. For Edit Company, written off accounts were P36,000 based on information provided. For Adventure Company, the uncollectible expense was P180,000, the adjusted allowance was P120,000, and the amortized accounts receivable was P1,080,000 based on sales, collections, recoveries, notes receivable, and estimates of collectability.

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142 views2 pages

Receivables Problem 5

Accounts receivable balances and allowance for doubtful accounts are given for Word Company. Calculations show uncollectible expense of P30,000 and allowance of P37,000 for 2019. For Edit Company, written off accounts were P36,000 based on information provided. For Adventure Company, the uncollectible expense was P180,000, the adjusted allowance was P120,000, and the amortized accounts receivable was P1,080,000 based on sales, collections, recoveries, notes receivable, and estimates of collectability.

Uploaded by

Ken Ashton Nombrado
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AC7&8 – Intermediate Accounting

Activity 5 – Receivables (Source: Intermediate Accounting Part 1 – Robles and Empleo)

A. Word Company uses allowance method of accounting for bad debts. The following summary
schedule was prepared from an aging of accounts receivable outstanding on December 31, 2019.

No. of Days Outstanding Amount Probability of Collection


0 – 36 days P500,000 98%
31 – 60 days 200,000 90%
Over 60 days 100,000 80%

The following information is available for the current year:


Net credit sales for the year P4,000,000
Allowance for uncollectible accounts, January 1, 2019 5,000 (cr.)
Allowance for uncollectible accounts, December 31, 2019
(before adjustment) 2,000(dr.)
REQUIRED:
Determine the Uncollectible Accounts Expense and Allowance for Uncollectible Accounts reported in
Word Company’s financial statements for 2019.

B. After examination of the records of Edit Company, you determined the following year-end amounts:

2019 2018
Net credit sales P1,200,00 P1,050,000
0
Accounts Receivable 305,000 260,000
Allowance for Uncollectible Accounts 12,000 6,000
Uncollectible accounts written off in previous
year and then recovered this year 3,000 -

Your examination of the records of the company indicates that uncollectible accounts expense
recorded during 2019 was P48,000.
REQUIRED:
What is the amount of the accounts receivable actually written off during 2019?

C. The financial statements of adventure company reported the following selected accounts.
Accounts Receivable, January 1, 2019 P1,200,000
Allowance for Uncollectible Accounts, January 1, 2019 60,000
Sales during 2019 10,000,000
Cash collected from customers 8,820,000

The cash collected from customers included a P20,000 recovery from a customer whose account was
written off in prior year. On November 15, a customer settled his over due account by issuing a 15%
4-month note for P400,000. During 2019, accounts of P100,000 were written off as worthless.

Analysis of the accounts receivable at December 31, 2019 revealed that P600,000 were considered
part due. Management’s estimate of probable loss on past due accounts is 20% and on current
accounts at 5%.
REQUIRED: Determine the following:
(a) Adjusted balance of Allowance for Uncollectible Accounts at December 31, 2019
(b) Uncollectible Accounts Expense for year 2019
(c) Amortized cost of accounts receivable at December 31, 2019

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