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Chapter 4 Receivables and Related Revenues PDF
Chapter 4 Receivables and Related Revenues PDF
1. D 2. C 3. C 4. B 5. D
6. D 7. B 8. B 9. A 10. D
c. No adjustment
d. Sales 40,000
Accounts Receivable 40,000
e. Sales 60,000
Accounts Receivable 60,000
Inventory 33,600
Cost of Sales 33,600
f. Sales 120,000
Accounts Receivable 120,000
h. No adjustment
4. Sales 24,000
Accounts Receivable E 24,000
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Chapter 4
Receivables and Related Revenues
5. Inventory 16,500
Cost of Sales 16,500
6. Sales 60,000
Accounts Receivable - F 15,000
Advances from Customers 45,000
7. Sales 85,000
Accounts Receivable G 85,000
Inventory 59,000
Cost of Sales 59,000
8. Sales 2,500
Accounts Receivable H 2,500
10,000 / 200 x (200 150) = 2,500
9. Sales 180,000
Accounts Receivable I 180,000
Account Per client Adjustment Per audit Not due 1-60 days 61-120 days Over 120
Past due pastdue days past
due
1 12,000 12,000 3,000 8,000 1,000
2 22,000 22,000 22,000
3 97,600 (98,800) 0
4 20,000 20,000 10,000 10,000
5 55,000 55,000 2,220 52,780
6 7,500 7,500 7,500
Total 215,300 (98,800) 116,000 27,220 68,280 11,000 10,000
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Chapter 4
Receivables and Related Revenues
Uncollectible Accounts Expense 2,188
Allowance for Doubtful Accounts 2,188
7,188 5,000 = 2,188
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Chapter 4
Receivables and Related Revenues
(b) Correct balance of Allowance for Uncollectible Accounts
Age Before Adjustment Per Audit % Uncollectible Required
Adjustments Allowance
Current P 4,067,320 (1,092,800) 2,974,520 2% P 59,490
31-60 days 402,440 402,440 5% 20,122
61-90 days 267,320 267,320 10% 26,732
> 90 days 898,620 (168,000) 730,620 30% 219,186
P 325,530
Audit Adjustments:
Sales 2,732,900
Accounts Receivable 2,732,900
Sales 3,260,700
Accounts Receivable 3,260,700
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Chapter 4
Receivables and Related Revenues
Principal P100,000
Interest for the entire term 3,333
Discount (103,333 x 8% x 4/12) ( 2,756)
Proceeds from discounting P 100,577
Carrying value, date of discounting 100,000
Gain on sale of notes P 577
Face P200,000
PV = 200,000 x .7972 159,440
Discount P 40,560
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Chapter 4
Receivables and Related Revenues
On NR from Officer
P4,000,000 x 9% P360,000
Face P3,000,000
Less: Discount on Notes Receivable
Initial discount P3,000,000 P2,253,900 = P746,100
Interest earned P2,253,900 x 10% x 8/12 = 150,260 595,840
Carrying value, 12/31/12 P2,404,160
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Chapter 4
Receivables and Related Revenues
(a) Audit Adjustments:
Interest Receivable 200,000
Interest Income 200,000
Current Assets:
Note Receivable from Company A
P550,000 (P1,743,445 x 10%) P119,345
Note Receivable from Company C, including
Accrued interest of P25,000 325,000
Total P444,345
Non-current Assets:
Note Receivable from Company A (P1,743,445 P119,345) P1,624,100
Note Receivable from Company B 2,404,160
Total Non-current Receivables P4,028,260
Interest Income:
From Company A P200,000
From Company B 150,260
From Company C 25,000
Total P375,260
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Chapter 4
Receivables and Related Revenues
Computations
6.
Classification Balance per audit % Uncollectible Required Allowance
Nov-Dec 2012 P1,080,000 2% P21,600
July October 2012 650,000 10% 65,000
January June 2012 420,000 25% 105,000
Prior to 1/01/12 90,000* 70% 63,000
Total P2,240,000 P254,600
Existing allowance = 154,000 95,000 + 15,000 + 180,000 60,000 194,000
Additional uncollectible accounts expense P 60,600
10. No impairment loss shall be recognized, the loss vent is a non-adjusting vent, which prsents condition different
from that as of the end of the reporting period.
11. No impairment loss shall be recognized on Company Ys note. The interest to be collected during the extended term
equals the original interest rate of the loan ; the prsent value of future cash inflow shall be equal to the loans carrying
value.
13. The non-adjusting vent requires disclosure, because even when taken alone, the loss would have a material effect on
the financial condition of 5-6.
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Chapter 4
Receivables and Related Revenues
+ 20,000 cost of unsold goods = P496,370
MEEMEE, Inc.
Adjusting Entries:
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Chapter 4
Receivables and Related Revenues
9. Accounts Payable 900
Miscellaneous Expenses 150
Cash in Bank _ BPI CA General 1,050
Answers:
(a) Petty Cash P8,240
(b) BPI SA depository 257,794
(c) BPI CA Payroll 76,250
(d) BPI CA Gen Disb. 214,150
(e) Security Bank SA 400,625
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Chapter 4
Receivables and Related Revenues
(f) Cash 556,434
(g) Accounts Receivable (Gross) 769,574
(h) Allowance for Bad Debts 17,457
(i) Bad Debts Expense 19,457
(j) Notes Receivable 18,000
(k) Liability on Discounted Notes 8,000
(l) Interest Receivable 517
(m) Interest Income 4,586
(n) Receivables from Officers and Employees 9,700
(o) Customer Credit Balances 13,800
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