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CHAPTER 3 - RECEIVABLES

Question no. 7

a. Accounts Receivable
b. Receivables from Employees (part of non-trade receivables) current assets
c. Advances to Suppliers Current assets or deduction from Accounts Payable to the same
supplier
d. Accounts Receivable
e. Customers Accounts with Credit Balances Current Liabilities
f. Cost of merchandise must be included in inventories
g. Accounts Receivable
h. Subscriptions Receivable current asset if collectible within 12 months; otherwise, non-
current asset or deduction from Shareholders Equity
i. Other Non-Trade Receivables Current asset or non-current asset depending on terms of
payment
j. Advances to Suppliers Current Assets
k. Suppliers Accounts with Debit Balances or Advances to Suppliers Current assets
l. Accounts Receivable
m. Claims for Income Tax Refund Current Assets
n. Accounts Receivable, amount of loan presented separately as part of liabilities
o. Accounts Receivable
p. Not recognized anymore (for write off)



PROBLEMS


3-1 (Ginoo Company)

Gross Method

Dec. 9 Accounts Receivable-First Lady 68,400
Sales 68,400
80,000 x 90% x 95%

10 Accounts Receivable-Mens World 50,000
Sales 50,000

19 Cash 67,032
Sales Discounts 1,368
Accounts Receivable-First Lady 68,400

26 Accounts Receivable-Teens Kingdom 40,000
Sales 40,000

31 Sales Discounts 800
Allowance for Sales Discounts 800

Jan. 5 Cash 39,200
Allowance for Sales Discounts 800
Accounts Receivable-Teens Kingdom 40,000

Chapter 3 Receivables
14
9 Cash 50,000
Accounts Receivable-Mens World 50,000

Net Method
Dec. 9 Accounts Receivable-First Lady 67,032
Sales 67,032
68,400 x .0.98

10 Accounts Receivable-Mens World 49,000
Sales 49,000

19 Cash 67,032
Accounts Receivable-First Lady 67,032

26 Accounts Receivable-Teens Kingdom 39,200
Sales 39,200

31 Accounts Receivable-Mens World 1,000
Sales Discount Forfeited 1,000

2013
Jan. 5 Cash 39,200
Accounts Receivable Teens Kingdom 39,200

9 Cash 50,000
Accounts Receivable-Mens World 50,000

Allowance Method
Dec. 9 Accounts Receivable-First Lady 68,400
Allowance for Sales Discount 1,368
Sales 67,032

10 Accounts Receivable-Mens World 50,000
Allowance for Sales Discount 1,000
Sales 49,000

Dec. 19 Cash 67,032
Allowance for Sales Discount 1,368
Accounts Receivable-First Lady 68,400

26 Accounts Receivable-Teens Kingdom 40,000
Allowance for Sales Discount 800
Sales 39,200

31 Allowance for Sales Discount 1,000
Sales Discount Forfeited 1,000

Jan. 5 Cash 39,200
Allowance for Sales Discount 800
Accounts Receivable-Teens Kingdom 40,000

9 Cash 50,000
Accounts Receivable-Mens World 50,000


Chapter 3 Receivables
15

3-2. (Colleco Supermarket)
June 1-
30
Accounts Receivable Citibank
Accounts Receivable - BDO
2,450,000
1,764,000

Accounts Receivable Metrobank 1,470,000
Credit Card Service Charges 116,000
Sales 5,800,000

Cash 3,234,000
Accounts Receivable - Citibank 2,156,000
Accounts Receivable - Metrobank 1,078,000

3-3 (Colayco Company)
(1)
July 14 Allowance for Doubtful Accounts 10,000
Accounts Receivable-Moret Co. 10,000

31 Notes Receivable 12,000
Sales 12,000

Aug. 15 Cash 20,000
Notes Receivable 15,000
Sales 35,000

Nov. 1 Cash 19,200
Credit Card Service Charge 800
Sales 20,000
4% x 20,000 = 800

Nov. 4 Accounts Receivable-P. Noval 12,300
Notes Receivable 12,000
Interest Revenue 300
12,000 x .10 x 90/360 = 300

5 Accounts Receivable-Credit Card 9,000
Sales 9,000

Nov. 9 Cash 8,550
Credit Card Service Charge 450
Accounts Receivable-Credit Card 9,000
5% x 9,000 = 450

Nov. 15 Accounts Receivable-Moret Co. 10,000
Allowance for Bad Debts 10,000

15 Cash 10,000
Accounts Receivable-Moret Co. 10,000

Dec. 13 Cash 15,600
Notes Receivable 15,000
Interest Income 600
15,000 x 12% x 120/360 = 600



Chapter 3 Receivables
16
3-4. (Format Company)

a. Carrying value of the note on January 1, 2012
P6,000,000 x 0.6575 P3,945,000
Prevailing interest rate 15%
Interest revenue for 2012 P 591,750

b. Carrying value, January 1, 2012 P3,945,000
Add amortization of discount during 2010 591,750
Carrying value, December 31, 2010 P4,536,750
(or simply P3,945,000 x 1.15 = P4,536,750)

3-5 (Formatted Company)

a. Carrying value of the note on January 1, 2012 (P2 M x 2.2832) P4,566,400
Interest rate 15%
Interest revenue for 2012 P 684,960

Carrying value, December 31, 2012
4,566,400 + 684,960 2,000,000 P3,251,360
Interest rate 15%
Interest revenue for 2013 P 487,704

b. Carrying value, January 1, 2012 P4,566,400
Add amortization of discount during 2012 684,960
Less first payment of principal (2,000,000)
Carrying value, December 31, 2012 P3,251,360

3-6. (HRV Company)

Accrued interest at June 30, 2012 (3,000,000 1,000,000) x 12% P 240,000

3-7. (FX Corporation)

a.
2012
Jan. 1 Notes Receivable 100,000
Accumulated Depreciation 420,000
Loss on Sale of Equipment 8,820
Equipment 500,000
Discount on Notes Receivable 28,820
100,000 x 0.7118 = 71,180
80,000 71,180 = 8,820 Loss on Sale
100,000 71,180 = 28,820 Discount

b.
2012
Dec. 31 Discount on Notes Receivable 8,542
Interest Revenue 8,542
12% x 71,180
2013
Dec. 31 Discount on Notes Receivable 9,567
Interest Revenue 9,567
12% x (71,180 + 8,542)


Chapter 3 Receivables
17

2014
Dec. 31 Discount on Notes Receivable 10,711
Interest Revenue 10,711
12% x (71,180 +8,542 + 9,567)
(or 28,820 8,542 9,567)

Dec. 31 Cash 100,000
Notes Receivable 100,000

3- 8 (Pinky Pop Company)

The note is interest-bearing, but the rate of interest of the note is unreasonably lower than the
prevailing rate for similar obligation. Thus, the present value of the note is determined as
follows:
2.5 M + (5% x 7.5 M) = 2,875,000 x 0.8929 P2,567,088
2.5 M + (5% x 5.0 M) = 2,750,000 x 0.7972 2,192,300
2.5 M + (5% x 2.5 M) = 2,625,000 x 0.7118 1,868,475
Total P6,627,863
or 2.5 M x 2.4018 P6,004,500
(5% x 7.5 M) x 0.8929 334,838
(5% x 5.0 M) x 0.7972 199,300
(5% x 2.5 M) x 0.7118 88,975
Total P6,627,613
a. Amortization Table

Date
Payment of
Principal
Interest
Paid
Interest
Revenue
Amortization
of Discount
Carrying
Value
01/01/12 6,627,863
12/31/12 2,500,000 375,000 795,344 420,344 4,548,207
12/31/13 2,500,000 250,000 545,785 295,785 2,343,992
12/31/14 2,500,000 125,000 281,008* 156,008* ------------
*rounded off

b. Journal entries
2012
Jan. 1 Notes Receivable 7,500,000
Discount on Notes Receivable 872,137
Gain on Sale of Land 627,863
Land 6,000,000
7,500,000 6,627,863 = 872,137 Discount
6,627,863 6,000,000 = 627,863 Gain


2012
Dec. 31 Cash 2,875,000
Discount on Notes Receivable 420,344
Interest Revenue 795,344
Notes Receivable 2,500,000

2013
Dec. 31 Cash 2,750,000
Discount on Notes Receivable 295,785
Interest Revenue 545,785
Notes Receivable 2,500,000
Chapter 3 Receivables
18

2014
Dec. 31 Cash 2,625,000
Discount on Notes Receivable 156,008
Interest Revenue 281,008
Notes Receivable 2,500,000

3-9 Pinky Pip Company

The note is interest-bearing, but the rate of interest of the note is unreasonably higher than the
prevailing rate for similar obligation. Thus, the present value of the note is determined as
follows:
2.5 M + (18% x 7.5 M) = 3,850,000 x 0.8929 P3,437,665
2.5 M + (18% x 5.0 M) = 3,400,000 x 0.7972 2,710,480
2.5 M + (18% x 2.5 M) = 2,950,000 x 0.7118 2,099,810
Total P8,247,955

or 2.5 M x 2.4018 P6,004,500
(18% x 7.5 M) x 0.8929 1,205,415
(18% x 5.0 M) x 0.7972 717,480
(18% x 2.5 M) x 0.7118 320,310
Total P8,247,705*
*Difference in the computations is due to rounding off

b. Amortization Table

Date
Payment of
Principal
Interest
Paid
Interest
Revenue
Amortization
of Premium
Carrying
Value
01/01/10 8,247,955
12/31/10 2,500,000 1,350,000 989,755 360,245 5,387,710
12/31/11 2,500,000 900,000 646,525 253,475 2,634,235
12/31/12 2,500,000 450,000 315,765* 134,235* ------------
*Difference is due to rounding off

b. Journal entries
2012
Jan. 1 Notes Receivable 7,500,000
Premium on Notes Receivable 747,955
Gain on Sale of Land 2,247,955
Land 6,000,000
8,247,955 7,500,000 = 747,955 Premium
8,247,955 6,000,000 = 2,247,955 Gain


2012
Dec. 31 Cash 3,850,000
Premium on Notes Receivable 360,245
Interest Revenue 989,755
Notes Receivable 2,500,000

2013
Dec. 31 Cash 3,400,000
Premium on Notes Receivable 253,475
Interest Revenue 646,525
Notes Receivable 2,500,000
Chapter 3 Receivables
19

2014
Dec. 31 Cash 2,950,000
Premium on Notes Receivable 134,235
Interest Revenue 315,765
Notes Receivable 2,500,000

3-10 (Word Company)

Bad Debts Expense P52,000
Allowance for Bad Debts 50,000

Required balance in allowance account:
(2% x 500,000) + (10% x 200,000) + (20% x 100,000) P50,000
Reported balance in allowance before adjustments (debit) 2,000
Required adjustment charged to bad debts expense P52,000

3-11 (Edit Company)

Allowance for Uncollectible Accounts, beg P 6,000
Recovery of accounts previously written off 3,000
Uncollectible accounts expense for 2012 48,000
Allowance for Uncollectible Accounts, end (12,000)
Accounts written off during 2012 P45,000
3-12 (Toyota Products, Inc.)

a. Accounts receivable 4,800,000
Sales 4,800,000

b. Cash 3,920,000
Sales discounts 80,000
Accounts receivable 4,000,000

c. Allowance for uncollectible accounts 20,000
Accounts receivable 20,000

d. Accounts receivable 5,000
Allowance for uncollectible accounts 5,000

Cash 5,000
Accounts receivable 5,000

e. Notes receivable 25,000
Accounts receivable 25,000

f. Cash 400,000
Notes payable-bank 400,000

Cash 150,000
Accounts receivable 150,000

Notes payable-bank 150,000
Cash 150,000

g. Uncollectible Accounts Expense 65,000
Allowance for Uncollectible Accounts 65,000
Chapter 3 Receivables
20
9,000 20,000 + 5,000 = 6,000 debit
59,000 + 6,000 = 65,000

h. Interest receivable 250
Interest revenue 250
25,000 x 12% x 30/360
Accounts receivable
(450,000+4,800,0004,000,00020,00025,000150,000) P1,055,000
Less Allowance for uncollectible accounts 59,000
Net realizable value/Net amortized cost P 996,000

3-13 (Rav, Inc.)

Accounts Receivable, December 31, 2011 P 337,000
Sales on account during 2012 1,500,000
Cash received from customers (1,600,000)
Cash discounts allowed: (882,000 98%) x 2% P18,000
(495,000 99%) x 1% 5,000 ( 23,000)
Recovery of accounts written off 3,000
Accounts written off as worthless ( 11,000)
Credit memoranda for sales returns ( 6,000)
Accounts Receivable, December 31, 2012 P 200,000

Allowance for Uncollectible Accounts, December 31, 2011 P 12,000
Recovery of accounts written off 3,000
Accounts written off as worthless ( 11,000)
Impairment loss on receivables 15,000
Allowance for Uncollectible Accounts, December 31, 2012 P 19,000

The computation may also be conveniently done through T-accounts, as follows:
Accounts Receivable
Balance, beg 337,000 Collections 1,600,000
Sales on account 1,500,000 Cash discounts 23,000
Recovery 3,000 Write off 11,000
Sales returns 6,000
Total 1,840,000 Total 1,640,000
Balance, end 200,000

Allowance for Uncollectible Accounts
Write off 11,000 Balance, beg 12,000
Recovery 3,000
Impairment 15,000
Total 11,000 Total 30,000
Balance, end 19,000










Chapter 3 Receivables
21
3-14 (Revo Company)

Allowance for Uncollectible Accounts, January 1, 2012 P 34,000
Accounts written off ( 47,000)
Recovery of accounts previously written off 7,000
Additional accounts written off ( 6,000)
Allowance for Uncollectible Accounts, December 31, 2012
before adjustments (debit balance) (P 12,000)
Required balance in Allowance account based on aging:
(5% x 240,000) + (25% x 20,000) + (50% x 30,000) + (90% x 24,000) 53,600
Required adjustment/Doubtful Accounts Expense for 2012 P65,600

Accounts Receivable, December 31, 2012 P654,000
Less Allowance for Uncollectible Accounts 53,600
Net amortized cost P600,400

3-15 (Adventure Company)
a. Accounts Receivable, January 1 P 1,200,000
Sales during 2012 10,000,000
Cash collected from customers (8,720,000)
Recovery of accounts previously written off 20,000
Note received in settlement of an account ( 400,000)
Accounts written off as worthless ( 100,000)
Accounts Receivable, December 31 P 2,000,000

Accounts Receivable, December 31 P 2,000,000
Past due accounts 600,000
Current accounts/Not yet past due P 1,400,000

Required balance in Allowance for Uncollectible Accounts:
20% x 600,000 past due accounts P 120,000
5% x 1,400,000 current accounts 70,000
Total P 190,000

b. Allowance for Uncollectible Accounts, end P 190,000
Accounts written off during the year as worthless 100,000
Recovery of accounts previously written off ( 20,000)
Allowance for Uncollectible Accounts, beg ( 60,000)
Uncollectible Accounts Expense for year 2012 P 210,000

c. Accounts Receivable P 2,000,000
Less Allowance for Uncollectible Accounts 190,000
Net amortized cost P1,810,000

3-16 (Maynilad Company)
Alternative 1
Carrying value (10 M + 1.2 M) 11,200,000
Present value of future cash inflows:
Principal due on 12/31/14
9M x 0.7972 P7,174,800
Interest for 2 years
9M x 8% = 720,000; 720,000 x 1.6901 1,216,872 8,391,672
Impairment loss P2,808,328
Chapter 3 Receivables
22
Entry: Restructured Notes Receivable 8,391,672
Impairment Loss Receivables 2,808,328
Notes Receivable 10,000,000
Interest Receivable 1,200,000

Alternative 2
Carrying value (10 M + 1.2 M) 11,200,000
Present value of future cash inflows:
2M + (8% x 10M) = 2,800,000 x 0.8929 2,500,120
2M + (8% x 8M) = 2,640,000 x 0.7972 2,104,608
2M + (8% x 6M) = 2,480,000 x 0.7118 1,765,264
2M + (8% x 4M) = 2,320,000 x 0.6355 1,474,360
2M + (8% x 2M) = 2,160,000 x 0.5674 1,225,584 9,069,936
Impairment loss 2,130,064

Entry: Restructured Notes Receivable 9,069,936
Impairment Loss Receivables 2,130,064
Notes Receivable 10,000,000
Interest Receivable 1,200,000

Alternative 3
Carrying value 10,000,000
Present value of future cash inflows:
Principal due on 12/31/14
10M x 0.7972 7,972,000
Interest due on 12/31/13 and 12/31/14
10M x 9% = 900,000; 720,000 x 1.6901 1,521,090 9,493,090
Impairment loss 506,910

Entry: Restructured Notes Receivable 9,493,090
Impairment Loss Receivables 506,910
Notes Receivable 10,000,000

Cash 1,200,000
Interest Receivable 1,200,000

Alternative 4
Carrying value 11,200,000
Present value of future cash inflows:
Principal due on 12/31/12
11.2M x 0.797193876 8,928,572
Interest due on 12/31/11 and 12/31/12
11.2M x 12% = 1,344,000;
1,344,000 x 1.6900510 2,271,428 11,200,000
Impairment loss ---------

No entry for the restructuring


3-17 (Kate Company)
(a) Cash 750,000
Notes Payable National Bank 750,000

Chapter 3 Receivables
23
(b) Current assets:
Trade and other receivables (including P900,000 of accounts
pledged as collateral for a loan with National Bank) P2,000,000

Current liabilities:
Notes Payable National Bank P 750,000
Interest Payable 7,500

3-18 (Lexus Company)
Amount of the loan P625,000
Less service charge (2% x 750,000) 15,000
Net proceeds from the assignment of accounts receivable P610,000

Sept. 1 Accounts Receivable Assigned 800,000
Accounts Receivable 800,000

Cash 634,000
Finance Charges 16,000
Notes Payable Pacific Bank 650,000

Sept 1-30 Cash 300,000
Accounts Receivable Assigned 300,000

Sept. 30 Notes Payable Pacific Bank 300,000
Interest Expense (650,000 x 12% x 1/12) 6,500
Cash 306,500

Oct. 1-31 Allowance for Uncollectible Accounts 10,000
Accounts Receivable Assigned 10,000

Cash 400,000
Accounts Receivable Assigned 400,000

Oct. 31 Notes Payable Pacific Bank 350,000
Interest Expense (325,000 x 12% x 1/12) 3,500
Cash 353,500

31 Accounts Receivable 100,000
Accounts Receivable Assigned 100,000



3-19. Accord Company)

July 1 Accounts Receivable Assigned 4,000,000
Accounts Receivable 4,000,000

1 Cash 3,040,000
Finance Charges 160,000
Notes Payable Bank 3,200,000
5% x 3,200,000 = 160,000

21 Sales Returns and Allowances 150,000
Accounts Receivable Assigned 150,000

Chapter 3 Receivables
24
July 31 Cash 2,450,000
Sales Discounts 50,000
Accounts Receivable Assigned 2,500,000
2% x 2,500,000 = 50,000

Aug 1 Notes Payable Bank 2,500,000
Interest Expense 48,000
Cash 2,548,000
3,200,000 x 0.18 x 1/12 = 48,000

15 Allowance for Uncollectible Accounts 50,000
Accounts Receivable Assigned 50,000

Aug 31 Cash 1,000,000
Accounts Receivable Assigned 1,000,000

Sept 1 Notes Payable Bank 700,000
Interest Expense 10,500
Cash 710,500
700,000 x 0.18 x 1/12 = 10,500

1 Accounts Receivable 300,000
Accounts Receivable Assigned 300,000
4,000,000 150,000 2,500,000 - 50,000 1,000,000 = 300,000

3 20 (Fortune Company)

Oct. 1 Accounts Receivable Assigned 2,000,000
Accounts Receivable 2,000,000

1 Cash 1,440,000
Finance Charges 90,000
Notes Payable 1,500,000

31 Interest Expense 15,000
Notes Payable 985,000
Accounts Receivable Assigned 1,000,000

Nov. 30 Notes Payable 515,000
Interest Expense 5,150
Cash 279,850
Accounts Receivable Assigned 800,000

3-21 (Highlander Company)
a.
Sept. 1 Cash 684,000
Receivable from Factor 36,000
Loss from Factoring 80,000
Accounts Receivable 800,000
800,000 x 10% =80,000 Loss;
720,000 x 5% = 36,000 withheld


Nov. 1 Cash 582,000
Finance Charges 18,000
Notes Payable-Bank 600,000
Chapter 3 Receivables
25
3% x 600,000 = 18,000
b.
Dec. 31 Uncollectible Accounts Expense 10,400
Allowance for Uncollectible Accounts 10,400
(190,000 + 1,000,000) x 2% = 23,800 13,400

3-22 (Hiku Company)

(a) Selling price of Accounts Receivable 90% x P1,200,000= P1,080,000
Factors holdback (6% x 1,080,000) ( 64,800)
Cash received from factoring P1,015,200

(b) Accounts receivable assigned balance (500,000 350,000) P 150,000
Balance of notes payable to the bank
400,000 (350,000 4,000) ( 54,000)
Equity on assigned accounts P 96,000

(c) Face value of note discounted P 50,000
Interest for the full term April 30 August 28
(50,000 x 9% x 120/360) 1,500
Maturity value P 51,500
Discount 51,500 x 10% x 88/360 (1,259)
Proceeds P 50,241

3-23 ( Edsamail Company)

(a) Maturity value = 500,000 + (500,000 x .08) = 540,000
Proceeds = 540,000 (540,000 x .10 x 5/12) = 517,500

(b) Interest Receivable 23,333
Interest Revenue 23,333
500,000 x 8% x 7/12

Cash 517,500
Loss on Sale of Notes Receivable 5,833
Notes Receivable 500,000
Interest Receivable 23,333

3-24 a. Proceeds 90,000 (90,000 x 0.15 x 20/365) = P89,260

Cash 89,260
Liability on Discounted Notes Receivable 89,260

b. Maturity value 75,000 + (75,000 x 0.15 x 90/365) = P77,774
Proceeds 77,774 (77,774 x 0.15 x 50/365) = P76,176

Interest Receivable 1,233
Interest Revenue 1,233

Cash 76,176
Liability on Discounted Notes Receivable 76,176


Chapter 3 Receivables
26
c. Maturity value 60,000 + (60,000 x 0.16 x 120/365) = P63,156
Proceeds 63,156 (63,156 x 0.15 x 45/365) = P61,988

Interest Receivable 1,973
Interest Revenue 1,973

Cash 61,988
Liability on Discounted Notes Receivable 61,988

3-25 (Crosswind Corporation)

2012
Feb. 1 Notes Receivable 60,000
Accounts Receivable 60,000

April 1 Interest Receivable 1,600
Interest Revenue 1,600
60,000 x 16% x 2/12

1 Cash 61,320
Liability on Discounted Notes Receivable 61,320
60,000 + (60,000 x .16 x 9/12) = 67,200
67,200 (67,200 x .15 x 7/12) = 61,320


Nov. 2 Liability on Discounted Notes Receivable 61,320
Interest Expense 280
Notes Receivable 60,000
Interest Receivable 1,600

30 Accounts Receivable (67,200 + 1,500) 68,700
Cash 68,700


3-26 (Explorer Company)
(a)
Accounts receivable factored P2,000,000
Purchase price 85%__
Purchase price of accounts receivable factored P 1,700,000
Less amount withheld as protection against returns and allowances
5% x 1,700,000 85,000_
Net cash received from the factored accounts P1,615,000

(b)
Cash 1,615,000
Receivable from Factor 85,000
Loss on Factoring 300,000
Accounts Receivable 2,000,000

Sales Returns 30,000
Receivable from Factor 30,000

Cash 55,000
Receivable from Factor 30,000

Chapter 3 Receivables
27
3-27. (Nature Company)

(a)
1/1/12 Interest Revenue 2,800
Interest Receivable 2,800

(a) Accounts Receivable 2,800,000
Sales 2,800,000

(b) Cash 2,200,000
Sales Discounts 18,000
Accounts Receivable (2,218,000 180,000)* 2,038,000
Accounts Receivable Assigned * 180,000

(c) Notes Receivable 250,000
Accounts Receivable 250,000

Cash 216,000
Notes Receivable 200,000
Interest Revenue 16,000

(d) Interest Receivable 2,800
Interest Revenue 2,800

Cash 41,400
Liability on Discounted Notes Receivable 41,400

(e) Accounts Receivable Assigned 300,000
Accounts Receivable 300,000

Cash 222,000
Finance Charges 18,000
Notes Payable 240,000

(f) Accounts Receivable 15,900
Notes Receivable 15,000
Interest Revenue 900

(g) Allowance for Uncollectible Accounts 12,000
Accounts Receivable 12,000

(h) Notes Payable 180,000
Interest Expense 3,000
Cash 183,000

(i) Uncollectible Accounts Expense 20,000
Allowance for Uncollectible Accounts 20,000
20,000 (12,000 12,000 )

(j) Interest Receivable 3,200
Interest Revenue 3,200
*See item (h)

Chapter 3 Receivables
28
(b) Trade and Other Receivables P876,900

Trade and Other Receivables include the following:
Notes Receivable P135,000
Accounts Receivable Unassigned 815,900
Accounts Receivable - Assigned 120,000
Interest Receivable 6,000
Allowance for Uncollectible Accounts ( 20,000)
Total P876,900
MULTIPLE CHOICE QUESTIONS

Theory

MC1 A MC6 A MC11 C
MC2 A MC7 C MC12 A
MC3 C MC8 C MC13 D
MC4 A MC9 C MC14 A
MC5 A MC10 A MC15 C


Problems

MC16 B 450,000 x 1.4 = 630,000
630,000 585,000 = 45,000
MC17 D 105,000 x .90 = 94,500 (Invoice price/Gross)
94,500 x .98 = 92,610 (net price)
MC18 C 200,000 x .90 x .95 = 171,000 (Invoice price/Gross)
171,000 x .97 = 165,870 (Net)
MC19 B 1,300,000 + 5,400,000 + 25,000 4,750,000 125,000 = 1,850,000
MC20 A 360,000 80% = 450,000
450,000 + 80,000 430,000 = 100,000
MC21 D 75,000 + 45,000 = 120,000
MC22 D 3% x 1,000,000 = 30,000
MC23 C 30,000 + 8,000 = 38,000
MC24 D 270,000 250,000 = 20,000
20,000 + 23,000 28,000 5,000 = 10,000
MC25 B 17,500 30,500 + 8,050 + 200,000 = 15,050
MC26 B 480,000 + 2,400,000 2,560,000 17,600 36,800* + 4,800 = 270,400
*1,411,200 .98 = 1,440,000 x 2% = 28,800
792,000 .99 = 800,000 x 1% = 8,000
28,800 + 8,000 = 36,800
MC27 A 19,200 + 4,800 17,600 = 6,400
5% x 270,400 = 13,520
13,520 6,400 = 7,120
MC28 A (5% x 600,000) + (10% x 40,000) + 14,000 = 48,000
MC29 B 20,000 + 7,500 12,500 3,700 = 11,300
MC30 D 50,000 + (50,000 x 10%) = 55,000
55,000 (55,000 x .12 x 6/12) = 51,700
MC31 C 400,000 x .75 = 300,000
300,000 x 10% = 30,000
MC32 C 300,000 + 30,000 = 330,000
MC33 C 1,940,000 x 13.4% x 1/12= 21,663
Chapter 3 Receivables
29
MC34 B 2,000,000 x 12% x 1/12 = 20,000 (Note: The difference between interest income of
P21,333 and interest receivable of 20,000 is debited to Discount on Notes Receivable).
MC35 B 500,000 x 8% x 4/12 = 13,333
MC36 B 1,250,000 - (2% x 1,250,000)} = 1,225,000
1,225,000 + 695,000 = 1,920,000
MC37 D (500,000 + 2,200,000) x 3% = 81,000; 81,000 32,000 = 49,000
MC38 C 550,000 [(500,000 x 0.8265) + (40,000 x 1.7355)] = 67,380
MC39 A 5,500,000 [(4,000,000 X .83) + (320,000 X 1.74)] = 1,623,200
MC40 D (4,000,000 X .83) + (320,000 X 1.74) = 3,876,800