ANSWERS

1. d. None of these.
2. b. Advances to subsidiaries and affiliates
3. a. P188,000
4. d. Fair value plus transaction costs that are directly attributable to the acquisition of the financial asset
5. a. The amount of the discount is not material.
6. c. P1,758,000
7. d. Normally given to encourage prompt payment
8. d. It properly reflects current period sales revenue.
9. d. P6,000
10. a. P136,250
11. d. Improved matching of bad debt expense with revenue.
12. c. Increase; No effect
13. d. P7,800
14. d. P198,000
15. a. P375,000
16. b. P3,560
17. c. P12,397.60
SOLUTIONS

3. Trade accounts receivable 186,000.00

Allowance for uncollectible accounts - 4,000.00
Claim against shipper for goods lost in transit last
November 2020 6,000.00
Selling price of unsold goods sent by Mann on
consignment at 30% of cost (not included in Mann’s
ending Inventory) 52,000.00 Not receivable yet
Security deposit on the lease of a warehouse 60,000.00 Noncurrent
Trade and other receivables 188,000.00

4. Accounts receivable 1,880,000.00

Allowance for doubtful accounts - 94,000.00
Allowance for sales discounts - 10,000.00
Allowance for sales returns - 15,000.00
Allowance for freight - 3,000.00
Net realizable value 1,758,000.00

9. List price 10,000.00

Trade discount - 30% 70%
Trade discount - 20% 80%
Price, net of trade discount 5,600.00
Freight (FOB shipping point, freight prepaid) 400.00
Full payment 6,000.00

10. List price 250,000.00

Trade discount - 20% 80%
Trade discount - 15% 85%
Price, net of trade discount 170,000.00
Return of damaged goods - 30,000.00
Freight (FOB destination, freight collect) - 3,750.00
Net realizable value 136,250.00

13. 12/31/20 12/31/19

Total accounts receivable 210,000.00 192,000.00
Net accounts receivable 204,000.00 189,000.00
Allowance for doubful accounts 6,000.00 3,000.00

Allowance for doubtful accounts

3,000.00 Beginning Balance
Writeoff 6,400.00 1,600.00 Recovery of account written off
7,800.00 Doubtful accounts expense (SQUEEZE)
Total debits 6,400.00 12,400.00 Total credits
Ending balance 6,000.00
12,400.00 12,400.00

Allowance for doubtful accounts , 12/31/19 3,000.00

Writeoff - 6,400.00
Recovery of account written off 1,600.00
Doubtful accounts expense (SQUEEZE) 7,800.00
Allowance for doubtful accounts , 12/31/20 6,000.00

14. Allowance for Doubtful Accounts, Jan. 1 108,000.00

Accounts written off as uncollectible - 120,000.00
Collection of accounts written off 30,000.00
Doubtful account expense
(6,000,000 x 3%) 180,000.00
Allowance for Doubtful Accounts, Dec. 31 198,000.00

15. Credit sales Writeoffs Recoveries

2017 5,000,000.00 125,000.00 10,000.00
2018 7,000,000.00 200,000.00 15,000.00
2019 8,000,000.00 325,000.00 25,000.00
Total 20,000,000.00 650,000.00 50,000.00

Net writeoffs (1,200,000 - 122,500) 600,000.00 3%

Credit sales 20,000,000.00

Doubtful accounts expense (12,500,000 x 3%) 375,000.00

16. Accounts Receivable
Accounts receivable, January 1, 2020 240,000.00
Credit sale 1,200,000.00 1,296,000.00 Collections, gross of disounts
8,800.00 Accounts written off
Recovery of previously written off account 2,400.00 2,400.00 Collection of previously written off account
Total debits 1,442,400.00 1,307,200.00 Total credits
135,200.00 Ending balance
1,442,400.00 1,442,400.00

Collection beyond discount period

(1,280,000 - 705,600 - 396,000 - 2,400) 176,000.00
Accounts collected within 10-day discount period, gross of
discount
(705,600/98%) 720,000.00
Accounts collected within 15-day discount period, gross of
discoount(396,000/99%) 400,000.00
Collections, gross of discount 1,296,000.00

Allowance for doubtful accounts, January 1, 2020 9,600.00 4%

Accounts receivable, January 1, 2020 240,000.00

Percentage in 2020 (4% x 125%) 5%

Accounts receivable, December 31, 2020 135,200.00

Percentage of account receivable 5%
Allowance for doubtful accounts, December 31, 2020
(REQUIRED allowance) 6,760.00

Allowance for doubtful accounts

9,600.00 Beginning Balance
Writeoff 8,800.00 2,400.00 Recovery of account written off
3,560.00 Doubtful accounts expense (SQUEEZE)
Total debits 8,800.00 15,560.00 Total credits
Ending balance 6,760.00
15,560.00 15,560.00

17. 12/31/2020
Date Amount Age % Required Allowance
12/6/2020 28,000 25.00 1% 280
11/29/2020 42,360 32.00 1.50% 635.4
9/2/2020 24,000 120.00 10% 2400
8/20/2020 17,840 133.00 50% 8920
12/8/2020 40,000 23.00 1% 400
10/25/2020 21,200 67.00 3% 636
11/17/2020 46,280 44.00 1.50% 694.2
10/9/2020 44,000 83.00 3% 1320
12/12/2020 38,400 19.00 1% 384
12/2/2020 24,800 29.00 1% 248
9/12/2020 34,800 110.00 10% 3480
Total 361,680.00 19,397.60

Required Allowance for doubftul accounts 19,397.60

Unadjusted credit balance - 7,000.00
Doubtful Accounst Expense 12,397.60