ACCOUNTS RECEIVABLE

KAYALAGINA Company operates in an industry that has a high rate of bad debts. On
December 31, 2019, before any year-end adjustments, the accounts receivable balance
was P20,000,000 and its allowance for doubtful accounts balance was P1,500,000. The
year-end balance reported for the allowance for doubtful accounts is based on the
following schedule:

Time Outstanding Accounts Receivable Percent Uncollectible

Under 30 days P10,000,000 5%
31 - 180 days 5,000,000 10%
181 - 360 days 3,000,000 30%
More than one year 2,000,000 100%

The accounts which have been outstanding for more than one year and 100% uncollectible
would be written off immediately. What should be the doubtful accounts expense for the year
ended December 31, 2019? P2,400,000

10,000,000 * 0.05 500,000

5,000,000 * 0.1 500,000
3,000,000 * 0.3 900,000
2,000,000 * 1 2,000,000
3,900,000

On January 1, 2019, the balance of accounts receivable of Manaoag Company was

P5,000,000 and the allowance for doubtful accounts on the same date was P800,000.
The following data were gathered:

Credit sales Write Offs Recoveries

2016 P10,000,000 P250,000 P20,000
2017 14,000,000 400,000 30,000
2018 16,000,000 650,000 50,000
2019 25,000,000 1,100,000 145,000

Doubtful accounts are provided for as a percentage of credit sales. The accountant calculates
the percentage annually by using the experience of the three years prior to the current year.
How much should be reported as 2019 doubtful accounts expense? P750,000
1,300,000 − 100,000
= 0.03 (percentage)
40,000,000

25,000,000 * 0.03 = 750,000

The following accounts were abstracted from DILIMALALIS Company's unadjusted trial
balance at December 31, 2019:
Debit Credit
Accounts receivable P20,000,000
Allowance for doubtful accounts 300,000
Net credit sales P70,000,000

DILIMALALIS estimates that 5% of the gross accounts receivable will become uncollectible.
The doubtful accounts expense for the year ended December 31, 2019 should be
P1,300,000

20,000,000 * 5% = 1,000,000
Allowance for D/A

Debit Credit

300,000 - Beg. Bal. 1,300,000 - Bad Debts Exp.

1,000,000 - End. Bal.

At the close of its first year of operations, December 31, 2020, XXX Company had accounts
receivable of P540,000, after deducting the related allowance for doubtful accounts. During
2020, the company had charges to bad debt expense of P90,000 and wrote off, as uncollectible,
accounts receivable of P40,000 and recovered P10,000 from previously written off account.
What should the company report on its statement of financial position on December 31, 2020,
as accounts receivable before the allowance for doubtful accounts? P600,000

A/R xxx NRV 540,000

Allowance for D/A (xxx) → Allowance for D/A 60,000
NRV 540,000 A/R 600,000
 Allowance for D/A

Debit Credit

40,000 - W/O 90,000 - Bad Debts Exp..

10,000 - Recoveries

60,000 - End. Bal.

XXX Corp. has outstanding accounts receivable totaling P2.54 million as of December 31 and
sales on credit during the year of P12.8 million. There is also a credit balance of P6,000 in the
allowance for doubtful accounts. If the company estimates that 1% of its net credit sales will be
uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end
adjustment to record bad debt expense? P134,000

12,800,000 * 1% = 128,000
Allowance for D/A
Debit Credit

6,000 - Beg. Bal.

128,000 - Bad Debts Exp.

134,000 - End. Bal.

XXX Inc had sales in 2019 of 700,000 and sales return of P20,000. At December 31, 2019,
before adjusting entries, the balances in selected accounts were accounts receivable 125,000
debit, and allowance for doubtful accounts 1,200 credit. Vivian estimates that 2% of its net sales
will prove to be uncollectable. What is the cash realizable value of the receivables reported on
the statement of financial position at December 31, 2019? P110,200

Sales 700,000 680,000 * 2% = 13,600 A/R 125,000

Sales Returns (20,000) ADA (14,800)
Net Sales 680,000 NRV 110,200
A company estimates that P20,000 of its P500,000 of accounts receivable will be uncollectible.
Its Allowance for Doubtful Accounts presently has a debit balance of P8,000. The adjusting
entry will include a credit of 28,000 to the Allowance for Doubtful Accounts.

Allowance for D/A

Debit Credit

8,000 - Beg. Bal. 28,000 - Bad Debts Exp.

20,000 - End. Bal.

On December 31, 2019, Coolwear, Inc. had balances in its accounts receivable and allowance
for uncollectible accounts of P480,400 and P1,000, respectively. No receivables were written off
during the year and Coolwear Inc. had credit sales of P426,000 during 2019. Coolwear
estimates 1.5% of accounts receivable not be collected. The entry to record bad debts expense
for 2019 would be (DR) Bad Debts Expense 6,206
(CR) Allowance for Uncollected Accounts 6,206

480,400 * 1.5% = 7,206

On June 15, 2019, Romela Company sold 100 air conditioning units. The sale price for each
unit is 45,000. All sales are subject to terms 2/10, n30. The entity used the gross method of
accounting for accounts receivable.

Compute the Accounts Receivable Ending Balance: 4,500,000

45,000 * 100 = 4,500,000
Compute the cash collected assuming payment was received on June 25, 2019: 4,410,000
4,410,000 * .98 = 4,410,000
Compute the cash collected assuming payment was received on July 10, 2019: 4,500,000
Affectionate company sold merchandise on account for 500,000. The terms are 3/10, n/30. The
related freight charge amounted to 10,000. The account was collected within the discount
period.

Compute the Cash collected if FOB destination and freight collect: 475,000
List price 500,000 NOTE: FOB Shipping point = buyer must pay
Discount (15,000) FOB Destination = seller must pay
Freight charge (10,000) Freight prepaid = seller paid for freight
Invoice price 475,000 Freight collect = buyer paid for freight

Compute the Cash collected if FOB destination and freight prepaid: 485,000
List price 500,000
Discount (15,000)
Invoice price 485,000
Compute the Cash collected if FOB shipping point and freight collect: 485,000
List price 500,000
Discount (15,000)
Invoice price 485,000
Compute the Cash collected if FOB shipping point and freight prepaid: 495,000
List price 500,000
Discount (15,000)
Freight charge 10,000
Invoice price 495,000

Vasguez Corporation had a 1/1/20 balance in the Allowance for Doubtful Accounts of P20,000.
During 2020, it wrote off P14,400 of accounts and collected P4,200 on accounts previously
written off. The balance in Accounts Receivable was P400,000 at 1/1 and P480,000 at 12/31. At
12/31/20, Vasguez estimates that 5% of accounts receivable will prove to be uncollectible. What
is the Bad Debt Expense for 2020? 14,200
480,000 * 5% = 24,000
Allowance for D/A
Debit Credit

14,400 - W/O 20,000 - Beg. Bal.

4,200 - Recoveries

14,200 - Bad Debts Exp.

24,000 - End. Bal.

 At the beginning of current year, Template Company showed the following accounts 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, 2/20, n/30 7,000,000
2. Collections from customers within the discount period 2,450,000
3. Collections from customers beyond the discount period 3,900,000
4. Accounts receivable written off as worthless 30,000
5. Recovery of accounts previously written off not included in the above collections 10,000
6. Credit memo for sales return 70,000

Compute the Net Realizable Value of Accounts Receivable: 1,480,000

Allowance for D/A

Beg. Bal. 40,000
Write-offs (30,000)
Recoveries 10,000
End. Bal. 20,000
Net Realizable Value
A/R 1,500,000
Allow. D/A (20,000)
NRV 1,480,000

Credible Company provided the following T-account summarizing the transactions Affecting the
accounts receivable for the current year:
Accounts Receivable

DR CR

Jan. 1 balance Collections from customers

600,000 5,300,000
Charge sales Writeoff
6,000,000 35,000
Shareholders subscriptions Merchandise returns
200,000 40,000
Deposit on contract Allowances to customer for shipping damages
120,000 25,000
Claims against common carrier for damages Collections on carrier claims
100,000 40,000
IOUs from employees Collections on subscriptions
10,000 50,000
Cash advance to affiliates
100,000
Advances to a supplier
50,000

Compute the correct balance of Accounts Receivable: 1,200,000

Accounts Receivable
Debit Credit

600,000 5,300,000 - Collection from customers

Way mosulod sa utok 35,000 - Write-offs

40,000 - Sales Ret.

Fiancee Company records sales returns during the year as a credit to accounts receivable.
However, at the end of the accounting period, the entity estimates the probable sales return and
records the same by means of an allowance account.

The following transactions occurred in summary form:

1. Sales of merchandise on account, 2/10, n/30: 4,000,000

2. Collection within the discount period: 1,470,000
3. Collection beyond the discount period: 1,000,000
4. Sales return granted: 100,000
5. Sales return estimates at the end of the year: 20,000

Compute the ending balance of Accounts Receivable: 1,400,000

Accounts Receivable
Debit Credit

4,000,000 - Credit Sales 1,500,000 - Collection (#2)

1,000,000 - Collection (#3)

100,000 - Sales Return

1,400,000 - End. Bal.

Marvelous Company reported the following information before adjustment at year-end:

Accounts receivable 500,000

Notes receivable 200,000
Allowance for doubtful accounts 20,000
Sales 5,000,000
Sales return and allowances 30,000
Sales discount 20,000

Required: Prepare adjusting entry to provide for doubtful accounts under each of the following
independent assumptions:

a. Past experience indicates that 75% of all sales are credit sales and that an average 2%
of credit sales may prove uncollectible.
b. One percent of gross sales may prove uncollectible.
c. An analysis of the aging of trade receivables indicates that accounts receivable in the
amount of 80,000 may prove uncollectible.
d. The policy is to maintain an allowance for doubtful accounts equal to 10% of the
outstanding accounts receivable.

Bad Debts Expense for Scenario A: 75,000

3,750,000 * 2% = 75,000
Bad Debts Expense for Scenario B: 50,000
5,000,000 * 1% = 50,000
Bad Debts Expense for Scenario C: 60,000
Beg. Bal. = 20,000
Bad Debt Exp. = 60,000
End. Bal. = 80,000
Bad Debts Expense for Scenario D: 30,000
Beg. Bal = 20,000
Bad Debt Exp. = 30,000
End. Bal . = 50,000

A trial balance before adjustments included the following:

Sales P425,000
Sales returns and allowance P14,000
Accounts receivable 43,000
Allowance for doubtful accounts 760
If the estimate of uncollectible is made by taking 2% of net sales, the amount of the adjustment
(expense) is 8,220.
Sales = 425,000 411,000 * 2% = 8,220
Sales Rets. and Allow. = (14,000)
Net Sales = 411,000

A trial balance before adjustments included the following:

Sales P425,000
Sales returns and allowance P14,000
Accounts receivable 43,000
Allowance for doubtful accounts 760

If the estimate of uncollectible is made by taking 10% of gross account receivables, the amount
of the adjustment (expense) is 3,540.

AG Inc. made a P10,000 sale on account with the following terms: 1/15, n/30. If the company
uses the net method to record sales made on credit, how much should be recorded as sales
revenue? 9,900
Accounts Receivable 9,900 10,000 * 99% = 9,900
Sales 9,900

Wellington Corp. has outstanding accounts receivable totaling P2.54 million as of December 31
and sales on credit during the year of P12.8 million. There is also a debit balance of P6,000 in
the allowance for doubtful accounts. If the company estimates that 1% of its net credit sales will
be uncollectible, what will be the balance in the allowance for doubtful accounts after the
year-end adjustment to record bad debt expense? 122,000
Allowance for D/A
Debit Credit

6,000 - Beg. Bal. 128,000 - Bad Debts Exp.

122,000 - End. Bal.

The following information is available for Murphy Company:

 Allowance for doubtful accounts at December 31, 2019 8,000
Credit sales during 2020 400,000
Accounts receivable deemed worthless and written off during 2020 9,000
As a result of a review and aging of accounts receivable, however, it has been determined that
an allowance for doubtful accounts of P5,500 is needed at December 31, 2020. What amount
should Murphy record as "bad debt expense" for the year ended December 31, 2020? 6,500
Allowance for D/A
Debit Credit

9,000 - W/O 8,000 - Beg. Bal.

6,500 - Bad Debts Exp.

5,500 - End. Bal.

Vivian, Inc had net sales in 2019 of 700,000. On December 31, 2019, before adjusting entries,
the balances in selected accounts were: accounts receivable 125,000 debit, and allowance for
doubtful accounts 1,200 credit. Vivian estimates that 2% of its net sales will prove to be
uncollectible. What is the cash realizable value of the receivables reported on the statement of
financial position at December 31, 2019? 109,800
A/R = 125,000
Allow. D/A = (15,200)
NRV = 109,800

Bembol Co. sold merchandise on credit to RePACorp. for P100,000 on July 1, with terms of
2/10, net /30. On July 6, ReyP returned P20,000 worth of merchandise claiming the materials
were defective. On July 8, Bembol received a payment from ReyP and credited Accounts
Receivable for P45,000. On July 24, ReyP Corp. paid the remaining balance on its account.
What was the total cash received from ReyP during July? 79,100
07/8 Cash 44,100
Sales Discount 900
Accounts Receivable 45,000
07/24 Cash 35,000
Accounts Receivable 35,000
44,100 + 35,000 = 79,100
At the close of its first year of operations, December 31, 2019, Ming Company had accounts
receivable of P540,000, after deducting the related allowance for doubtful accounts. During
2019, the company had charges to bad debt expense of P90,000 and wrote off, as uncollectible,
accounts receivable of P40,000. What should the company report on its statement of financial
position on December 31, 2019, as accounts receivable before the allowance for doubtful
accounts? 590,000
NRV = 540,000
Allow. D/A = 50,000
A/R = 590,000

XXX Inc had net sales in 2019 of 700,000. On December 31, 2019, before adjusting entries, the
balances in selected accounts were: accounts receivable 125,000 debit, and allowance for
doubtful accounts 1,200 credit. Vivian estimates that 2% of its net sales will prove to be
uncollectible. What is the cash realizable value of the receivables reported on the statement of
financial position at December 31, 2019? 109,800
700,000 * 2% = 14,000

Net Realizable Value

A/R = 125,000
Allow. D/A = (15,200)
NRV = 109,800

Before year-end adjusting entries, Dunn Company's account balances at December 31, 2020,
for accounts receivable and the related allowance for uncollectible accounts were P600,000 and
P45,000, respectively. An aging of accounts receivable indicated that P62,500 of the December
31 receivables are expected to be uncollectible. The cash realizable value of accounts
receivable after adjustment is 537,500.
A/R = 600,000
Allow. D/A = (62,500)
NRV = 537,500
The following information is available for XXX Company: Allowance for doubtful accounts at
December 31, 2019 P8,000; Credit sales during 2020 P400,000; Accounts receivable deemed
worthless and written off during 2020 P9,000;
As a result of a review and aging of accounts receivable in early January 2021, however, it has
been determined that an allowance for doubtful accounts of P5,500 is needed at December 31,
2020. What amount should Murphy record as "bad debt expense" for the year ended December
31, 2020? 6,500