Name:________________________

Section:_______________________

RECEIVABLES

PROBLEM 1
The following data were taken from the records of Freda Company for the year ended December 31,
2019:
Sales on account P 3, 600, 000
Notes received to settle accounts P 400, 000
Provision for doubtful accounts P 90, 000
Accounts receivable determined to be worthless P 25, 000
Purchases on account P 3, 900, 000
Payments to creditors P 3, 200, 000
Discounts allowed by creditors P 260, 000
Merchandise returned by customer P 15, 000
Collections received to settle accounts P 2,450, 000
Notes given to creditors in settlement of P 250, 000
accounts
Merchandise returned to supplier P 70, 000
Payments on notes payable P 100, 000
Discounts taken by customer P 40, 000
Collections received in settlement of accounts P 180, 000

1. What is the balance of accounts receivables on December 31, 2019?

a. P 670, 000 c. P 735, 000
b. P 710, 000 d. P 1, 110, 000
2. What is the net realizable value on December 31, 2019?
a. P 580, 000 c. P 645, 000
b. P 605, 000 d. P 620, 000

PROBLEM 2
The December 31, 2015, statement of financial position of the PATU Company included the following
information:
Accounts receivable P 672, 000
Less: Allowance for doubtful accounts (42, 300) P 629, 700
Notes receivable* 65, 400
Total receivables P 695, 100
*The company is contingently liable for discounted notes receivable of P 114, 000.
During the year ended December 31, 2016, the following transactions occurred:
Sales on credit P 2,623, 800
Collections of accounts receivable 2, 523, 000
Accounts receivable written off as 41, 400
uncollectible
Notes receivable collected 87, 000
Customer notes received in payment of 216, 000
accounts receivable

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 Notes receivable discounted that were paid at 108, 000
maturity
Notes receivable discounted that were 6, 075
defaulted, including interest of P60 and P15
fee. This amount is expected to be collected
during 2017
Proceeds from customer notes discounted 135, 225
with recourse (principal P135, 000, accrued
interest P600)
Collections on accounts previously written off 1, 500
Sales returns and allowances (on credit sales) 6, 000
Bad debts were estimated to be 1.5% of
credit sales

Based on the preceding information, determine the balances of the following accounts at December 31,
2016

3. Accounts receivable
a. P 515, 475 c. P 473,718
b.P513, 975 d. P 509, 400
4. Allowance for doubtful accounts
a. P39, 357 c. P 40, 857
b. P41, 757 d. P40, 800
5. Notes Receivable
a. P59, 400 c. P 329, 400
b. P200, 400 d. P194, 400
6. Notes receivable discounted
a. P 135, 000 c. P129, 000
b. P 114, 000 d. P 120, 000

7. Roxy Company had the following information for 2013 relating to accounts receivable:

Accounts receivable, January 1 1,300,000

Credit sales 5,400,000
Collection from customers, excluding recovery 4,750,000
Accounts written off 125,000
Collection of accounts written off in prior year
(customer credit was not reestablished) 25,000
Estimated uncollectible receivables per aging 165,000

On December 31, 2013, what is the balance of accounts receivable, before allowance for doubtful
accounts?
a. 1,825,000 c. 1,950,000
b. 1,850,000 d. 1,990,000

8. The following data were taken from the records of Infra Company for the year ended December 31,
2013:

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 Sales on account 3,600,000
Notes received to settle accounts 400,000
Provision for doubtful accounts 90,000
Accounts receivable determined to be worthless 25,000
Purchases on account 3,900,000
Payment to creditors 3,200,000
Discounts allowed by creditors 260,000
Merchandise returned by customers 15,000
Collections received to settle accounts 2,450,000
Notes given to creditors in settlement of 250,000
accounts
Merchandise returned to suppliers 70,000
Payments on notes payable 100,000
Discounts taken by customers 40,000
Collections received in settlement of notes 180,000

What is the net realizable value of accounts receivable on December 31, 2013?
a. 605,000 c. 825,000
b. 890,000 d. 670,000

On January 1, 2016, Wackisan Co. sells inventory with a list price of P 100,000 on account under credit
terms of 15%, 20%, 3/10, n/30.

Questions:
Based on the above data, answer the following:
9. Under the gross method, how much should be debited to accounts receivable on January 1, 2016?
a. 100,000 c. 68,000
b. 85,000 d. 65,960

10. Under the net method, how much should be debited to accounts receivable on January 1, 2016?
a. 100,000 c. 68,000
b. 85,000 d. 65,960

On June 30, 2013, Ray Company discounted at the bank a customer’s 6,000,000, 6-month, 10% note
receivable dated April 30,2013. The bank discounted the note at 12% without recourse.
Questions:
11. What is the amount received from the note receivable discounting?
a. 5,640,000 c. 6,048,000
b. 5,760,000 d. 6,174,000

12. What is the loss on note receivable discounting?

a. 252,000 c. 52,000
b. 152,000 d. 48,000

13. On June 1, 2013, Yola Company loaned Dale 500,000 on a 12% note, payable in five annual
installments of P100,000 beginning January 1, 2014. In connection with this loan, Dale was required to

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deposit P5,000 in a noninterest bearing escrow account. The amount held in escrow is to be returned to
Dale after all principal and interest payments have been made.

Interest on the note is payable on the first day of each month beginning July 1, 2013. Dale made timely
payments through November 1, 2013. On January 1, 2014, Yola received payment of the first principal
installment plus all interest due.

On December 31, 2013, what is the accrued interest receivable on the loan?
a. 0 c. 10,000
b. 5,000 d. 15,000

Questions: Based on the above and the result of your audit, determine the adjusted balance of
following:
14. The trade accounts receivable as of December 31, 2006 is
a. P1,147,500 c. P1,485,000
b. P1,522,500 d. P1,447,500

15. The current trade and other receivables net as of December 31, 2006 is
a. P2,647,500 c. P2,272,500
b. P2,610,000 d. P1,822,500

16. How much of the foregoing will be presented under noncurrent assets as of December 31, 2006? a.
P1,200,000 c. P525,000
b. P 375,000 d. P 0

Presented below are a series of unrelated situations. Answer the following questions relating to each of
the independent situations as requested.

17. Bantay Company’s unadjusted trial balance at December 31, 2006, included the following accounts:

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Bantay Company estimates its bad debt expense to be 1 1/2% of net sales. Determine its bad debt
expense for 2006.
a. P225,000 c. P214,500
b. P254,500 d. P 55,000

18. An analysis and aging of Burgos Corp. accounts receivable at December 31, 2006, disclosed the
following:

What is the net realizable value of Burgos’ receivables at December 31, 2006?
a. P15,700,000 c. P16,250,000
b. P17,500,000 d. P14,450,000

19. Cabugao Company provides for doubtful accounts based 3% of credit sales. The following data are
available for 2006.

What is the balance in allowance for doubtful accounts for December 31, 2006?
a. 630,000 c. 500,000
b. 420,000 d. 580,000

20. At the end of the first year of operations, December 31, 2006, Caoayan, inc. reported the following
information:

What should be the balance in accounts receivable at December 31, 2006, before subtracting the
allowance for doubtful accounts?
a. 10,100,000 c. 9,740,000
b. 10,340,000 d. 10,580,000

21. The following accounts were taken from Cervantes Inc.’s balance sheet at December 31, 2006.

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If the doubtful accounts are 3% of accounts receivable, determine bad debt expense to be reported for
2006.
a. 123,000 c. 223,000
b. 23,000 d. 225,000

22. Orr Company prepared an aging of accounts receivable on December 31, 2013 and determined that
the net realizable value of the accounts receivable was P2,500,000. Additional information is as follows:

Allowance for doubtful accounts on January 1 280,000

Accounts written off as uncollectible 230,000
Accounts receivable on December 31 2,700,000
Uncollectible accounts recovery 50,000

For the year ended December 31, 2013, what amount should be recognized as doubtful accounts
expenses?
a. 230,000 c. 150,000
b. 200,000 d. 100,000

23. Mill Company’s allowance for doubtful accounts was 1,000,000 at the end of 2013 and 900,000 at
the end of 2012. For the year ended December 31, 2013, the entity reported doubtful accounts expense
of 160,000 in the income statement. What amount was debited to the appropriate account in 2013 to
write off uncollectible accounts?
a. 60,000 c. 160,000
b. 100,000 d. 260,000

24. Boholano Company used the statement of financial position approach in estimating uncollectible
accounts expense. The entity prepared an adjusting entry to recognize this expense. The entity prepared
an adjusting entry to recognize this expense at the end of the year. During the year, the entity wrote off
a P100,000 receivable and made no recovery of previous writeoff. After the adjusting entry for the year,
the credit balance in the allowance for doubtful accounts was 250,000 larger than it was on January 1.
What amount of uncollectible account expense was recorded for the year?
a. 250,000 c. 150,000
b. 100,000 d. 350,000

25. Barr Company showed the following at year-end:

Allowance for doubtful accounts (debit balance) (16,000)
Net sales 7,100,000
The entity estimated its uncollectible receivables at 2% of net sales. What is the allowance for doubtful
accounts at year-end?
a. 158,000 c. 142,000

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b. 144,500 d. 126,000

26-27. Zeus Company factored P6,000,000 of accounts receivable to a finance entity on October 1,2013.
Control was surrendered by Zeus Company. The factor assessed a fee of 3% and retained a holdback
equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a
weighted average time to maturity of the accounts receivable of 54 days.

26. What is the amount of cash initially received from the factoring?
a. 5,296,850 c. 5,476,850
b. 5,386,850 d. 5,556,850

27. If all accounts are collected, what is the cost of factoring the accounts receivable?
a. 313,150 c. 433,150
b. 180,000 d. 613,150

28. Crater Company factored without recourse P2,000,000 of accounts receivable without guarantee for
a finance charge of 5%. The finance entity retained an amount equal to 10% of the accounts receivable
for possible adjustments. What amount should be recorded as gain or loss on the transfer of accounts
receivable?
a. 200,000 loss c. 600,000 loss
b. 200,000 gain d. 600,000 gain

29-30. Roth Company received from a customer a one-year, P500,000 note bearing annual interest of
8%. After holding the note for six months, the entity discounted the note without recourse at 10%.

29. What amount of cash was received from the bank?

a. 540,000 c. 513,000
b. 523,810 d. 495,238

30. What is the loss on note receivable discounting?

a. 27,000 c. 12,000
b. 20,000 d. 7,000