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Activity 1

The document provides account balances and transactions for Temple Company's accounts receivable during the current year. It includes beginning balances, sales on account, collections from customers, accounts receivable written off and recovered, and credit memos. It asks to prepare journal entries for accounts receivable, calculate the adjustment for doubtful accounts using the percentage of accounts receivable method, and determine the net realizable value of accounts receivable at year-end.

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Rey Viloria
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146 views2 pages

Activity 1

The document provides account balances and transactions for Temple Company's accounts receivable during the current year. It includes beginning balances, sales on account, collections from customers, accounts receivable written off and recovered, and credit memos. It asks to prepare journal entries for accounts receivable, calculate the adjustment for doubtful accounts using the percentage of accounts receivable method, and determine the net realizable value of accounts receivable at year-end.

Uploaded by

Rey Viloria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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At the beginning of current year, Temple Company showed the following account balances:

Accounts receivable 1,000,000


Allowance for doubtful accounts 40,000

The following summary transactions occurred during the current year:

1. Sales on account, 2/ 30, n/ 30, P7,000,000


2. Collections from customers within the discount period, P2,450,000.
3. Collections from customers beyond the discount period, P3,900,000
4. Accounts receivable written off as worthless, P30,000
5. Recovery of accounts previously written off not included in the above collections,
P10,000
6. Credit memo for sales return, P70,000

Required:

a. Prepare journal entries pertaining to accounts receivable.


b. Prepare the adjustment for doubtful accounts at year-end if the entity uses the percentage
of accounts receivable method consistently.
c. What is the net realizable value of accounts receivable at year-end?

At the beginning of current year, Rampant Company reported that the allowance for doubtful
accounts has a credit balance of P170,000.

Bad debt recoveries and bad debts written off in the current year were P30,000 and P235,000,
respectively.

The allowance account had been previously calculated as a percentage of net sales.
It was decided however to provide for doubtful accounts commencing with the year-end
adjusting entry on the basis of an analysis of the age of the receivables.

The following schedule was prepared.

Percent
Uncollectible
Not yet due 1,700,000 NIL
1-30 days past due 1,200,000 5
31-60 days past due 100,000 25
61-90 days past due 150,000 50
Over 90 days past due 120,000 100
Additional accounts to be written off 30,000

Required:

a. What is the required allowance for doubtful accounts at year-end?


b. How much would be the doubtful accounts expense for the current year?
c. What is the adjusting entry for the doubtful accounts expense for the current year?
d. What is the net realizable value of accounts receivable at year-end?

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