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CHAPTER 3 - RECEIVABLES

3-1.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
3-2.

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

(Ginoo Company)
Gross Method
Dec. 9 Accounts Receivable-First Lady
Sales
80,000 x 90% x 95%
10
19

26
31
2014

Jan. 5

19

68,400

Accounts Receivable-Mens World


Sales

50,000

Cash
Sales Discounts
Accounts Receivable-First Lady

67,032
1,368

Accounts Receivable-Teens Kingdom


Sales

40,000

Sales Discounts
Allowance for Sales Discounts

50,000

68,400
40,000
800
800

Cash
Allowance for Sales Discounts
Accounts Receivable-Teens Kingdom

39,200
800

Cash
Accounts Receivable-Mens World

50,000

Net Method
Dec. 9 Accounts Receivable-First Lady
Sales
68,400 x .0.98
10

68,400

40,000
50,000
67,032
67,032

Accounts Receivable-Mens World


Sales

49,000

Cash
Accounts Receivable-First Lady

67,032

49,000
67,032

Chapter 3 Receivables
Dec. 26
31
2014

Jan. 5
9

Accounts Receivable-Teens Kingdom


Sales
Accounts Receivable-Mens World
Sales Discount Forfeited

Dec. 19

26

31

39,200
1,000
1,000

Cash
Accounts Receivable Teens Kingdom

39,200

Cash
Accounts Receivable-Mens World

50,000

Allowance Method
Dec. 9 Accounts Receivable-First Lady
Allowance for Sales Discount
Sales
10

39,200

39,200
50,000
68,400
1,368
67,032

Accounts Receivable-Mens World


Allowance for Sales Discount
Sales

50,000

Cash
Allowance for Sales Discount
Accounts Receivable-First Lady

67,032
1,368

Accounts Receivable-Teens Kingdom


Allowance for Sales Discount
Sales

40,000

Allowance for Sales Discount


Sales Discount Forfeited

1,000
49,000

68,400
800
39,200
1,000
1,000

2014

Jan. 5

3-3.

Cash
Allowance for Sales Discount
Accounts Receivable-Teens Kingdom

39,200
800

Cash
Accounts Receivable-Mens World

50,000

(Colleco Supermarket)
June 1- Accounts Receivable Citibank
30 Cash
Accounts Receivable Metrobank
Credit Card Service Charges
Sales
Cash

40,000
50,000

2,450,000
1,764,000
1,470,000
116,000
5,800,000
3,234,000

Accounts Receivable - Citibank


Accounts Receivable - Metrobank
3-4.

(Colayco Company)
(1)
July 14 Allowance for Doubtful Accounts
Accounts Receivable-Moret Co.
31

Notes Receivable
Sales

2,156,000
1,078,000

10,000
10,000
12,000
12,000

13

Chapter 3 Receivables
Aug. 15

Nov.

Nov. 4

5
Nov. 9

Nov. 15
15
Dec. 13

3-5.

Cash
Notes Receivable
Sales

20,000
15,000

Cash
Credit Card Service Charge
Sales
4% x 20,000 = 800

19,200
800

Accounts Receivable-P. Noval


Notes Receivable
Interest Revenue
12,000 x .10 x 90/360 = 300

12,300

35,000

20,000

12,000
300

Accounts Receivable-Credit Card


Sales

9,000

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

8,550
450

9,000

9,000

Accounts Receivable-Moret Co.


Allowance for Bad Debts

10,000

Cash
Accounts Receivable-Moret Co.

10,000

Cash
Notes Receivable
Interest Revenue
15,000 x 12% x 120/360 = 600

15,600

10,000
10,000
15,000
600

(Format Company)
a.

b.

Carrying value of the note on January 1, 2013


P6,000,000 x 0.6575
Prevailing interest rate
Interest revenue for 2013

P3,945,000
15%
P 591,750

Carrying value, January 1, 2013


Add amortization of discount during 2013
Carrying value, December 31, 2013

P3,945,000
591,750
P4,536,750

(or simply P3,945,000 x 1.15 = P4,536,750)


3-6.

(Formatted Company)
a.

b.

Carrying value of the note on January 1, 2013 (P2 M x 2.2832)


Interest rate
Interest revenue for 2013

P4,566,400
15%
P 684,960

Carrying value, December 31, 2013


4,566,400 + 684,960 2,000,000
Interest rate
Interest revenue for 2014

P3,251,360
15%
P 487,704

Carrying value, January 1, 2013


Add amortization of discount during 2012
Less first payment of principal
Carrying value, December 31, 2012

P4,566,400
684,960
(2,000,000)
P3,251,360

14

Chapter 3 Receivables
3-7.

3- 8.

(HRV Company)
(a)

September 30, 2014 (1,000,000)+(3,000,000 x 12%)


September 30, 2015 (1,000,000)+(2,000,000 x 12%)
September 30, 2016 (1,000,000)+(1,000,000 x 12%)

P1,360,000
P1,240,000
P1,120,000

(b)

January 1 September 30, 2014 (260,000 x 9/12)


October 1 December 31, 2014 (240,000 x 3/12)
Total interest revenue for 2014

P 270,000
60,000
P 330,000

(c)

As of December 31, 2013


Notes receivable
Interest receivable (360,000 x 3/12)

Non-current
P2,000,000

Current
P1,000,000
90,000

(Pinky Pop Company)


The note is interest-bearing, but the rate of interest of the note (5%) is unreasonably lower than
the prevailing rate (10%) for similar obligation. The present value of the note is determined as
follows:
2.5 M + (5% x 7.5 M)
2,875,000
x
0.9091
P2,613,663
2.5 M + (5% x 5.0 M) = 2,750,000
x
0.8264
2,272,600
2.5 M + (5% x 2.5 M) = 2,625,000
x
0.7513
1,972,163
Total
P6,858,426
or

2.5 M x 2.4869
(5% x 7.5 M) x 0.9091
(5% x 5.0 M) x 0.8264
(5% x 2.5 M) x 0.7513
Total

(a)

Amortization Table
Payment of
Interest
Date
Principal
Paid
01/01/13
12/31/13
2,500,000
375,000
12/31/14
2,500,000
250,000
12/31/15
2,500,000
125,000
*difference is due to rounding off

(b)

P6,217,250
340,913
206,600
93,913
P6,858,676
Interest
Revenue
685,843
466,927
238,804*

Amortization
of Discount
310,843
216,927
113,804*

Carrying
Value
6,858,426
4,669,269
2,386,196
------------

Journal entries

2013

Jan. 1

Dec. 31

2014

Dec. 31

2015

Dec. 31

Notes Receivable
Discount on Notes Receivable
Gain on Sale of Land
Land
7,500,000 6,858,426 = 641,574 Discount
6,858,426 6,000,000 = 858,426 Gain

7,500,000

Cash
Discount on Notes Receivable
Interest Revenue
Notes Receivable

2,875,000
310,843

Cash
Discount on Notes Receivable
Interest Revenue
Notes Receivable

2,750,000
216,927

Cash
Discount on Notes Receivable
Interest Revenue
Notes Receivable

2,625,000
113,804

641,574
858,426
6,000,000

685,843
2,500,000

466,927
2,500,000

238,804
2,500,000

15

Chapter 3 Receivables
3-9.

Pinky Pip Company


The note is interest-bearing, but the rate of interest of the note (14%) is unreasonably higher than
the prevailing rate (10%) for similar obligation. The present value of the note is determined as
follows:
2.5 M + (14% x 7.5 M) = 3,550,000
2.5 M + (14% x 5.0 M) = 3,200,000
2.5 M + (14% x 2.5 M) = 2,850,000
Total
or

2.5 M x 2.48685
(14% x 7.5 M) x
(14% x 5.0 M) x
(14% x 2.5 M) x
Total

x
x
x

0.9091
0.8264
0.7513

P3,227,305
2,644,480
2,141,205
P8,012,990
P6,217,125
954,555
578,480
262,955
P8,013,115*

0.9091
0.8264
0.7513

*Difference in the computation is due to rounding off of present values


a.

Amortization Table
Date
01/01/13
12/31/13
12/31/14
12/31/15

Payment of
Principal
2,500,000
2,500,000
2,500,000

Interest
Paid
1,050,000
700,000
350,000

Interest
Revenue
801,299
526,429
259,282*

Amortization
of Premium
248,701
173,571
90,718*

Carrying
Value
8,012,990
5,264,289
2,590,718
------------

*Difference is due to rounding off


b.
2013

Jan. 1

Dec. 31

2014

Dec. 31

2015

Dec. 31

Journal entries
Notes Receivable
Premium on Notes Receivable
Gain on Sale of Land
Land
8,012,990 7,500,000 = 512,990 Premium
8,247,955 6,000,000 = 2,247,955 Gain

7,500,000
512,990

Cash
Premium on Notes Receivable
Interest Revenue
Notes Receivable

3,550,000

Cash
Premium on Notes Receivable
Interest Revenue
Notes Receivable

3,200,000

Cash
Premium on Notes Receivable
Interest Revenue
Notes Receivable

2,850,000

16

2,012,990
6,000,000

248,701
801,299
2,500,000

173,571
526,429
2,500,000

90,718
259,282
2,500,000

Chapter 3 Receivables
3-10.

(Word Company)
Uncollectible Accounts Expense
Allowance for Uncollectible Accounts

P52,000
50,000

Required balance in allowance account:


(2% x 500,000) + (10% x 200,000) + (20% x 100,000)
Reported balance in allowance before adjustments (debit)
Required adjustment charged to uncollectible accounts expense
3-11.

P50,000
2,000
P52,000

(Edit Company)
Allowance for Uncollectible Accounts, beg
Recovery of accounts previously written off
Uncollectible accounts expense for 2013
Allowance for Uncollectible Accounts, end
Accounts written off during 2013

3-12.

P 6,000
3,000
48,000
(12,000)
P45,000

(Toyota Products, Inc.)


a.
b.

c.
d.

e.
f.

g.

h.

Accounts receivable
Sales

4,800,000

Cash
Sales discounts
Accounts receivable

3,920,000
80,000

4,800,000

4,000,000

Allowance for uncollectible accounts


Accounts receivable

20,000
20,000

Accounts receivable
Allowance for uncollectible accounts

5,000

Cash
Accounts receivable

5,000

Notes receivable
Accounts receivable

25,000

Cash
Notes payable-bank

400,000

Cash
Accounts receivable

150,000

Notes payable-bank
Cash

150,000

5,000
5,000
25,000
400,000
150,000
150,000

Uncollectible Accounts Expense


Allowance for Uncollectible Accounts
9,000 20,000 + 5,000 = 6,000 debit
59,000 + 6,000 = 65,000
Interest receivable
Interest revenue
25,000 x 12% x 30/360

65,000
65,000

250
250

Accounts receivable
(450,000+4,800,0004,000,00020,00025,000150,000)
Less Allowance for uncollectible accounts
Amortized cost of accounts receivable

17

P1,055,000
59,000
P 996,000

Chapter 3 Receivables
3-13.

(Rav, Inc.)
Accounts Receivable, December 31, 2012
Sales on account during 2013
Cash received from customers
Cash discounts allowed: (882,000 98%) x 2%
(495,000 99%) x 1%
Recovery of accounts written off
Accounts written off as worthless
Credit memoranda for sales returns
Accounts Receivable, December 31, 2013

P 337,000
1,500,000
(1,600,000)
P18,000
5,000

Allowance for Uncollectible Accounts, December 31, 2012


Recovery of accounts written off
Accounts written off as worthless
Impairment loss on receivables
Allowance for Uncollectible Accounts, December 31, 2013

(23,000)
3,000
(11,000)
(6,000)
P 200,000
P 12,000
3,000
(11,000)
15,000
P 19,000

The computation may also be conveniently done through T-accounts, as follows:


Balance, beg
Sales on account
Recovery
Total
Balance, end
Write off
Total
3-14.

Accounts Receivable
337,000 Collections
1,500,000 Cash discounts
3,000 Write off
Sales returns
1,840,000 Total
200,000
Allowance for Uncollectible Accounts
11,000 Balance, beg
Recovery
Impairment
11,000 Total
Balance, end

12,000
3,000
15,000
30,000
19,000

(Revo Company)
Allowance for Uncollectible Accounts, January 1, 2013
Accounts written off
Recovery of accounts previously written off
Additional accounts written off
Allowance for Uncollectible Accounts, December 31, 2012
before adjustments (debit balance)
Required balance in Allowance account based on aging:
(5% x 240,000) + (25% x 20,000) + (50% x 30,000) + (90% x 24,000)
Required adjustment/Uncollectible Accounts Expense for 2013
Accounts Receivable, December 31, 2013
Less Allowance for Uncollectible Accounts
Net amortized cost

3-15.

1,600,000
23,000
11,000
6,000
1,640,000

P 34,000
(47,000)
7,000
(6,000)
(P12,000)
53,600
P65,600
P654,000
53,600
P600,400

(Adventure Company)
a.

Required/Adjusted balance of 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

18

Chapter 3 Receivables

3-16.

Accounts Receivable, December 31


Past due accounts
Current accounts/Not yet past due

P 2,000,000
600,000
P 1,400,000

Accounts Receivable, January 1


Sales during 2012
Cash collected from customers
Recovery of accounts previously written off
Note received in settlement of an account
Accounts written off as worthless
Accounts Receivable, December 31

P 1,200,000
10,000,000
(8,720,000)
20,000
( 400,000)
( 100,000)
P 2,000,000

b.

Adjusted Allowance for Uncollectible Accounts, end


Accounts written off during the year as worthless
Recovery of accounts previously written off
Allowance for Uncollectible Accounts, beg
Uncollectible Accounts Expense for year 2013

P190,000
100,000
(20,000)
(60,000)
P210,000

c.

Accounts Receivable
Less Allowance for Uncollectible Accounts
Amortized cost of accounts receivable, December 31, 2013

P2,000,000
190,000
P1,810,000

(Maynilad Company)
Alternative 1
Carrying value (10 M + 1.2 M)
Present value of future cash inflows:
Principal due on 12/31/15 (9M x 0.7972)
Interest for 2 years
9M x 8% = 720,000; 720,000 x 1.6901
Impairment loss
Entry: Restructured Notes Receivable
Impairment Loss Receivables
Notes Receivable
Interest Receivable
Alternative 2
Carrying value (10 M + 1.2 M)
Present value of future cash inflows:
2M + (8% x 10M) = 2,800,000 x 0.8929
2M + (8% x 8M) = 2,640,000 x 0.7972
2M + (8% x 6M) = 2,480,000 x 0.7118
2M + (8% x 4M) = 2,320,000 x 0.6355
2M + (8% x 2M) = 2,160,000 x 0.5674
Impairment loss
Entry: Restructured Notes Receivable
Impairment Loss Receivables
Notes Receivable
Interest Receivable

11,200,000
P7,174,800
1,216,872
8,391,672
2,808,328
10,000,000
1,200,000
11,200,000
2,500,120
2,104,608
1,765,264
1,474,360
1,225,584

9,069,936
2,130,064

9,069,936
2,130,064

Alternative 3
Carrying value
Present value of future cash inflows:
Principal due on 12/31/15
10M x 0.7972
7,972,000
Interest due on 12/31/14 and 12/31/15
10M x 9% = 900,000; 900,000 x 1.6901 1,521,090
Impairment loss

19

8,391,672
P2,808,328

10,000,000
1,200,000
10,000,000

9,493,090
506,910

Chapter 3 Receivables
Entry: Restructured Notes Receivable
Impairment Loss Receivables
Notes Receivable

9,493,090
506,910

Cash
Interest Receivable

1,200,000

10,000,000
1,200,000

Alternative 4
Carrying value
Present value of future cash inflows:
Principal due on 12/31/13
11.2M x 0.797193876
Interest due on 12/31/13 and 12/31/14
11.2M x 12% = 1,344,000;
1,344,000 x 1.6900510
Impairment loss

11,200,000
8,928,572
2,271,428

11,200,000
-0-

No entry is required for the restructuring.


3-17. (Kate Company)
(a)
Cash
Notes Payable National Bank
(b)

3-18.

750,000
750,000

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
Interest Payable

P 750,000
7,500

(Lexus Company)
Amount of the loan
Less service charge (2% x 800,000)
Net proceeds from the assignment of accounts receivable
Sept. 1

Sept 1-30

P650,000
16,000
P634,000

Accounts Receivable Assigned


Accounts Receivable

800,000

Cash
Finance Charges
Notes Payable Pacific Bank

634,000
16,000

Cash

300,000

800,000

650,000

Accounts Receivable Assigned


Sept. 30

Oct. 1-31

Notes Payable Pacific Bank


Interest Expense (650,000 x 12% x 1/12)
Cash
Allowance for Uncollectible Accounts
Accounts Receivable Assigned
Cash

300,000
300,000
6,500
306,500
10,000
10,000
400,000

Accounts Receivable Assigned


Oct.

31

31

400,000

Notes Payable Pacific Bank


Interest Expense (350,000 x 12% x 1/12)
Cash

350,000
3,500

Accounts Receivable
Accounts Receivable Assigned

100,000

20

353,500
100,000

Chapter 3 Receivables
3-19.

Accord Company)
July 1
1

21
31

Aug. 1

15
31
Sept. 1

1
320.

4,000,000

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

3,040,000
160,000

Sales Returns and Allowances


Accounts Receivable Assigned

150,000

Cash
Sales Discounts
Accounts Receivable Assigned
2% x 2,500,000 = 50,000

2,450,000
50,000

Notes Payable Bank


Interest Expense (3.2M x 0.12 x 1/12)
Cash

2,500,000
32,000

Allowance for Uncollectible Accounts


Accounts Receivable Assigned
Cash
Accounts Receivable Assigned

4,000,000

3,200,000

150,000

2,500,000

2,532,000
50,000
50,000
1,000,000
1,000,000

Notes Payable Bank


Interest Expense (700,000 x 0.12 x 1/12)
Cash

700,000
7,000

Accounts Receivable
Accounts Receivable Assigned

300,000

707,000
300,000

(Fortune Company)
Oct. 1
1

31

Nov. 30

3-21.

Accounts Receivable Assigned


Accounts Receivable

Accounts Receivable Assigned


Accounts Receivable

2,000,000

Cash
Finance Charges
Notes Payable

1,410,000
90,000

2,000,000

1,500,000

Interest Expense (1.5M x 0.12 x 1/12)


Notes Payable
Accounts Receivable Assigned

15,000
985,000

Notes Payable
Interest Expense (515,000 x 0.12 x 1/12)
Cash
Accounts Receivable Assigned

515,000
5,150
279,850

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

21

1,000,000

800,000

684,000
36,000
80,000
800,000

Chapter 3 Receivables
Nov. 1

b.
Dec. 31

3-22.

3-24.

582,000
18,000
600,000

Uncollectible Accounts Expense


Allowance for Uncollectible Accounts
(190,000 + 1,000,000) x 2% = 23,800 13,400

10,400
10,400

(Hiku Company)
(a)

Selling price of Accounts Receivable 90% x P1,200,000=


Factors holdback (6% x 1,080,000)
Cash received from factoring

P1,080,000
(64,800)
P1,015,200

(b)

Accounts receivable assigned balance (500,000 350,000)


Balance of notes payable to the bank
400,000 (350,000 4,000)
Equity on assigned accounts

P 150,000
P

(54,000)
96,000

Face value of note discounted


Interest for the full term April 30 August 28
(50,000 x 9% x 120/360)
Maturity value
Discount (51,500 x 10% x 88/360)
Proceeds

50,000

(c)

3-23.

Cash
Finance Charges
Notes Payable-Bank
3% x 600,000 = 18,000

P
P

1,500
51,500
(1,259)
50,241

( Edsamail Company)
(a)

Maturity value = 500,000 + (500,000 x .08) = 540,000


Proceeds = 540,000 (540,000 x 0.10 x 5/12) = 517,500

(b)

Interest Receivable
Interest Revenue
500,000 x 8% x 7/12

a.

23,333
23,333

Cash
Loss on Sale of Notes Receivable
Notes Receivable
Interest Receivable

517,500
5,833

Proceeds 90,000 (90,000 x 0.12 x 20/365)

= P89,408

500,000
23,333

Cash

89,408
Liability on Discounted Notes

b.

Maturity value 75,000 + (75,000 x 0.09 x 90/365)


Proceeds 76,664 (76,664 x 0.12 x 50/365)
Cash

89,408
= P76,664
= P75,404
75,404

Liability on Discounted Notes


c.

Maturity value 60,000 + (60,000 x 0.14 x 120/365)


Proceeds 62,762 (62,762 x 0.12 x 45/365)
Cash

75,404
= P62,762
= P61,833
61,833

Liability on Discounted Notes

22

61,833

Chapter 3 Receivables
3-25.

(Crosswind Corporation)
2013

Feb. 1
Apr. 1

Nov. 2

2
3-26.

Notes Receivable
Accounts Receivable

60,000

Cash
Liability on Discounted Notes
60,000 + (60,000 x .10 x 9/12) = 64,500
64,500 (64,500 x .12 x 7/12) = 59,985

59,985

Liability on Discounted Notes


Interest Expense (64,500 x 0.12 x 7/12)
Notes Receivable
Interest revenue (60,000 x 0.10 x 9/12)

59,985
4,515

Accounts Receivable (64,500 + 1,500)


Cash

66,000

60,000
59,985

60,000
4,500
66,000

(Explorer Company)
(a)
Accounts receivable factored
Purchase price
Purchase price of accounts receivable factored
Less amount withheld (5% x 1,700,000)
Net cash received from the factored accounts
(b)
Cash
Receivable from Factor
Loss on Factoring
Accounts Receivable

P2,000,000
85%
P 1,700,000
85,000
P 1,615,000
1,615,000
85,000
300,000
2,000,000

Sales Returns
Receivable from Factor

30,000

Cash

55,000

30,000

Receivable from Factor


3-27.

30,000

(Nature Company)
(a)
1/1/12
(1)
(2)

(3)
(4)

Interest Revenue
Interest Receivable

2,800
2,800

Accounts Receivable
Sales

2,800,000

Cash
Sales Discounts
Accounts Receivable (2,218,000 180,000)*
Accounts Receivable Assigned *

2,200,000
18,000

2,800,000

2,038,000
180,000

Notes Receivable
Accounts Receivable

250,000

Cash
Notes Receivable
Interest Revenue

216,000

250,000
200,000
16,000

23

Chapter 3 Receivables
(5)

(6)

(7)

(8)
(9)

(10)

Cash
Liability on Discounted Notes

41,400

Liability on Discounted Notes


Interest expense
Notes Receivable
Interest revenue

41,400
4,600

Accounts Receivable Assigned


Accounts Receivable

300,000

Cash
Finance Charges
Notes Payable

222,000
18,000

41,400

40,000
6,000
300,000

240,000

Accounts Receivable
Notes Receivable
Interest Revenue

15,900

Allowance for Uncollectible Accounts


Accounts Receivable

12,000

15,000
900
12,000

Notes Payable
Interest Expense
Cash

180,000
3,000
183,000

Uncollectible Accounts Expense


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

20,000
20,000

(11)

Interest Receivable
Interest Revenue
*See item (9)
(b)

3,200
3,200

Trade and Other Receivables

P1,014,100

Trade and Other Receivables include the following:


Notes Receivable
Accounts Receivable Unassigned
Accounts Receivable - Assigned
Interest Receivable
Allowance for Uncollectible Accounts
Total

24

95,000
815,900
120,000
3,200
(20,000)
P1,014,100

Chapter 3 Receivables
MULTIPLE CHOICE QUESTIONS
Theory
MC1
MC2
MC3
MC4
MC5
MC6
MC7
MC8
MC9
MC10

A
B
A
A
C
A
D
A
A
C

MC11
MC12
MC13
MC14
MC15
MC16
MC17
MC18

C
C
A
C
A
D
A
C

Problems
MC19
MC20

B
D

MC21
MC22
MC23
MC24
MC25
MC26
MC27
MC28
MC29

C
B
A
D
D
C
D
B
B

MC30
MC31
MC32
MC33
MC34
MC35
MC36
MC37

A
A
B
D
C
C
C
B

MC38
MC39
MC40
MC41
MC42
MC43
MC44
MC45

A
C
B
B
D
C
A
D

*
Date
July 1,
July 1,
July 1,
July 1,
July 1,

450,000 x 1.4 = 630,000; 630,000 585,000 = 45,000


105,000 x .90 = 94,500 (Invoice price/Gross)
94,500 x .98 = 92,610 (net price)
200,000 x .90 x .95 = 171,000 (Invoice price/Gross); 171,000 x .97 = 165,870 (Net)
1,300,000 + 5,400,000 + 25,000 4,750,000 125,000 = 1,850,000
360,000 80% = 450,000; 450,000 + 80,000 430,000 = 100,000
75,000 + 45,000 = 120,000
3% x 1,000,000 = 30,000
30,000 + 8,000 = 38,000
270,000 250,000 = 20,000; 20,000 + 23,000 28,000 5,000 = 10,000
17,500 30,500 + 8,050 + 200,000 = 15,050
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
19,200 + 4,800 17,600 = 6,400; 5% x 270,400 = 13,520; 13,520 6,400 = 7,120
(5% x 600,000) + (10% x 40,000) + 14,000 = 48,000
20,000 + 7,500 12,500 3,700 = 11,300
50,000 + (50,000 x 10%) = 55,000; 55,000 (55,000 x .12 x 6/12) = 51,700
400,000 x .75 = 300,000; 300,000 x 10% = 30,000
300,000 + 30,000 = 330,000
1,940,000 x 13.4% x 1/12= 21,663
2,000,000 x 12% x 1/12 = 20,000 (Note: The difference between interest income of
P21,663 and interest receivable of 20,000 is debited to Discount on Notes Receivable).
902,500 (11% x 2,800,000) = 594,500
(308,000 x 6/12) + (242,605 x 6/12) = 275,303 (See complete amortization table below)*
500,000 + (500,000 x 8%) = 540,000; 540,000 (540,000 x 10% x 8/12) = 504,000
1,250,000 - (2% x 1,250,000)} = 1,225,000; 1,225,000 + 695,000 = 1,920,000
(500,000 + 2,200,000) x 3% = 81,000; 81,000 32,000 = 49,000
550,000 [(500,000 x 0.8265) + (40,000 x 1.7355)] = 67,380
5,500,000 [(4,000,000 X .83) + (320,000 X 1.74)] = 1,623,200
(4,000,000 X .83) + (320,000 X 1.74) = 3,876,800
Annual payment

2012
2013
2014
2015
2016

902,500
902,500
902,500
902,500

Interest income

11% x 2,800,000=308,000
11% x 2,205,500=242,605
11% x 1,545,605=170,017
902,500-813,122=89,378

25

Reduction in principal
902,500-308,000=594,500
902,500-242,605=659,895
902,500-170,017=732,483
813,122

Balance
2,800,000
2,205,500
1,545,605
813,122
-0-