1.

The following information relates to Armageddon Company’s accounts receivable for 2007:
Accounts receivable, 1/1/07 P 650,000
Credit sales for 2007 2,700,000
Sales returns for 2007 75,000
Accounts written off during 2007 40,000
Collections from customers during 2007 2,150,000
Allowance for doubtful accounts 1/1/07 90,000
The net realizable value of accounts receivable at December 31, 2007 amounted to P975,000.
The uncollectible accounts expense of Armageddon Company for 2007 is
a. P20,000 b. 50,000 c. P60,000 d. P70,000

2. Rosalyn Company was incorporated on January 1, 2006. All sales are on account under the terms 3/10, 1/20, n/30. Rosalyn Company uses the
aging of the receivables approach in providing bad debts. Provided below is the aging schedule which Rosalyn Company’s accountant prepares
at the end of the accounting period.

Days past due Probability of collectibility

1 – 30 days 95%
31 – 60 days 80%
61 – 90 days 60%
91 – 120 days 30%
over 120 days 10%

During 2006, Rosalyn Company reported sales of P14,500,000. Initial bad debts expense has been provided during the year at 2.5% of gross
sales. Write-offs during the year amounted to P75,000. In July 2006, Rosalyn Company received a P50,000 face value note from a customer as
payment for goods sold in February. The note carries an interest rate of 10% and will mature on June 30, 2008. Total cash collections for 2006
amounted to P12,961,000; of which P3,686,000 were collected within 10 days from the date of sale, P2,475,000 were collected beyond 10
days but within 20 days from the date of sale and the rest after 20 days, including recoveries totaling to P40,000.

At the end of the year, a schedule of the receivable was provided

Age of the Receivables Percentage
1 – 30 days 35%
31 – 60 days 25%
61 – 90 days 20%
91 – 120 days 10%
121 – 150 days 7%
over 150 days 3%
3. The accounts receivable balance at December 31, 2006 is
a. P1,275,000 b. P1,315,000 c. P1,415,000 d. P1,554,000

4. The allowance for bad debts account balance prior to the preparation of the aging schedule is
a. P362,500 b. P402,500 c. P287,500 d. P327,500

5. The amount of bad debts expense to be reported in the 2006 income statement is
a. P362,500 b. P468,422 c. P256,578 d. P221,578

6. When a specific customer’s account receivable is written off as uncollectible, what will be the effect on net income under each of the following
methods of recognizing bad debts expense?
Allowance Direct write-off Allowance Direct write-off
a none decrease c. decrease decrease
b. decrease none d. none none

7. Receivables from subsidiaries and affiliates, if significant should be classified as

a. Current assets
b. Noncurrent assets
c. Either as noncurrent or current depending on the expectation of realizing them within one year or over one year
d. Intangible assets

8. Receivables from officers, directors and employees for goods sold or services rendered in the ordinary course of business
a. Are considered current if proper control is exercised in granting credit and the accounts are currently collectible
b. Are not included in trade accounts receivable
c. Are included in current assets even if the receivables are actually loans and advances and the collection is unlikely within a year
d. Are always classified as noncurrent
9. Wellington Corp. has outstanding accounts receivable totaling $1.27 million as of December 31 and sales on credit during the year
of $6.4 million. There is also a debit balance of $3,000 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?

a. $12,700 c. $61,000
b. $15,700 d. $67,000

10. Wellington Corp. has outstanding accounts receivable totaling $6.5 million as of December 31 and sales on credit during the year of
$24 million. There is also a credit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 8% of its
outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year?

a. $532,000 c. $1,920,000
b. $520,000 d. $508,000

11. Wellington Corp. has outstanding accounts receivable totaling $5 million as of December 31 and sales on credit during the year
of $25 million. There is also a debit balance of $20,000 in the allowance for doubtful accounts. If the company estimates that 8% of its
outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end
adjustment to record bad debt expense?

a. $2,000,000 c. $4 00,000
b. $380,000 d. $420,000

12. At the close of its first year of operations, December 31, 2012, Ming Company had accounts receivable of $1,080,000, after
deducting the related allowance for doubtful accounts. During 2012, the company had charges to bad debt expense of $180,000 and wrote
off, as uncollectible, accounts receivable of $80,000. What should the company report on its balance sheet at December 31, 2012, as
accounts receivable before the allowance for doubtful accounts?

a. $1,340,000 c. $980,000
b. $1,180,000 d. $880,000

13. Before year-end adjusting entries, Dunn Company's account balances at December 31, 2012, for accounts receivable and the related
allowance for uncollectible accounts were $1,200,000 and $90,000, respectively. An aging of accounts receivable indicated that
$125,000 of the December 31 receivables are expected to be uncollectible. The net realizable value of accounts receivable after
adjustment is

a. $1,165,000. c. $985,000.
b. $1,075,000. d. $1,110,000.

14. During the year, Kiner Company made an entry to write off a $16,000 uncollectible account. Before this entry was made, the
balance in accounts receivable was $200,000 and the balance in the allowance account was $18,000. The net realizable value of accounts
receivables

a. $200,000. c. $166,000.
b. $198,000. d. $182,000.

15. Smithson Corporation had a 1/1/12 balance in the Allowance for Doubtful Accounts of $20,000. During 2012, it wrote off $14,400 of
accounts and collected $4,200 on accounts previously written off. The balance in Accounts Receivable was $400,000 at 1/1 and
$480,000 at 12/31. At 12/31/12, Smithson estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt
Expense for 2012?

a. $4,000.
b. $14,200.
c. $18,400.
d. $24,000.