M accounting 21 Financial Receivables PROBLEM No. 4 Adjustments rendibeta gheeetBlion of francial stterent ot tan JAcbounts Receivable sccount consists ofthe fot 7 Trade accounts recelvable (cure i Past dus rade aconunts © Uncollectable accounts P ‘) Credit balances in customers’ account : Notes receivable dishonored e ‘Consignment shipments ~ a cos! Me consignee sold goods costing P86 00 tammission was charged by the consignee and Banana. The cash was receved in January. 2 Thebalance ofthe allowance for doubt accounts before au rot provided yet for the 200 bad debt expense. the conignee'wh 3, oust ecouns expetee PROBLEM No. 2— Allowance for Doubtful Accounts Sales returns and alowances Instructions 2) Prepare te trie oc otireed Eee tlre tha seuteaecomuns agreed be (100% feceivable and (2) 1% of et sales Es ote Aksvnde or Dot eras ar & xt ber (©) Assume tat al he fformaton above isthe same, except at ihe Mawar OS 2500 instead ofa ered lanes. How wil hs siference a PROBLEM No. 3- Reconstruction of Accounts 20 Flor (22 ) ata ousanrg bone of acca skate? qe SHSM J), Whats the required balance of the allowance for doubt accounts? tens _ 7107, i eos DIRT.) i) ‘What is the additional doubtful accounts expense? i * & What is the balance of note receivable and related interest? 2 ie “g woe 4 ge1200s ot Decanbar 35,201.54 Crear tn ag — LT ea | fa San Ta re] —| — ae rE Pee Ae | | — ppl ee a ors Taoog E 2 ree : er SDH | May aa ae EO Ses Sze iS ov. 25 222) [2008 a fa 420 [Sept 30 (open) 7309 fa Joc 75 Tam oct. aut [Dec.20- Sate The Alowarce for Uncolectibe Accounts, before aud has a cad balance of PS.00. The alawance acount ‘adjusted to balance determined as follows: "ee i be ‘Accounts not due 1% ‘Accounts 81-120 days past due 5% ‘Accounts 1-60 days past due 2% ‘Accounts over 120 days past due 50% ZThe allowance for uncollecible accounts is to be based only on the trade accounts. Except where payments are ‘earmarked, the oldest items are paid frst. jaan Plo (61. wars neoustanngonance of accounts ecovable unde 61-120 day past? 10 a yw SHUN 'What is the outstanding balance of accounts receivable? & ‘What isthe required balance ofthe allowance for doubtful accounts? tees 7120 fh) What is the additional doubtful accounts expense? 3) ‘What is the balance of note receivable and related interest? ot eee‘Rccounting 21 Financial pepe hl oe Taleb © Oscar ¢. sofa Jt Auge ai Beek B— TrusFaise Indie whether te eeeat isu ore be nats noha re be repr FE 2 Arete: wnat nots forancomcie secs meno rode xt ee ee a I ee dm eas ire ea cer ee or abt scone gore ec rs th a Te Wrentnore as boon afar Bk © Tot ae nner tne cece rami aah een the coneponang evr shout B47 Sermons ona worn neg prs a 2 pence Se ce os es ranean ae Eee pater me pan noe mens ene Die Reet etcrcenn tS near crac tore crt TRO! pee tremens torn vagina sate ctacoeing wan torn #8 8ST, me 1 Se rr nena sass be burden olny ord “Fran are preserang he equ Ee ate a ee eeole noses, te bye ci) Noma HSH a amar nan aes ay es er rare sou repre wih wade rote mae, 6 forsee erat Rees on yee tans of eos ee BRE SER eaRSTce are comer oer omens he. gre wnat pomion pt a A ete min abet francaise a oes GE ais ae as psn acorn ial apres abe, Jue 25 Tinton! Aczuning sundat Boar eins i conga ter ra eg mre sree yet weet T Fase € Te rental cong Sands Dow ecient ema imparmont assessment, al recalvabie er Aarau be conta fr npn sept, “Bie xe Fsipocarnnecencovabes epoch of eng wracie spun $m “rca Rye ery method results in a more accurate valuation of receivables on the balance sheet. sear craSacures ban oh fae The, =e Fetes arta at re conta eevee, pene va8 ae rh puchvar onus ek ot coc 2 Woot ‘buying receivables with recour Fa Poiana aaron of opt acvanes Yeo, wr phasis matching over absorbs any cra o hoy are ceracouise® rianion of ne noe recavabe wil be Yse han 802® ® 8 a & om] anes a erat blnce A B5000. The ‘Uncaecble Aceourts, Deere E rt eae " so be based only on the trade accounts. Except where payments are = tor uncoecble secourts The alowarce tbs ar pals IS. he outstanding bance ot acouns raah pg _Gh220" aio nie 6-120 ays pst 8? Se Ae oe wnat iat te cumandng bares em=ane AN for dou accounts? wr ination dowel zs a BR eo ein oct ord mw ita\ ‘accounting 21 Financial Aces #2 Receivable 'al Accounting and Reporing Part celvables a OO eon Problem No. 2 ia following three account ; ) Groat 14.900 aise é ADAY Haliups sete otveeat 2B gy CHD. f A ‘Allowance for sive szcounts 00 (ett: r 7500 ~ Hg 4 “The balance ofthese accounts were conect. The company recoded nt ad the accouis rca 2 with allowance fo sales discounts c “ ccec ae aero D During the calendar year ot 2034 he company made sales of na ere gas caret cat 9 amet sos er aay ilar, a : rer ee erent are eens eyes a cee Cover «prod of sevaral yeas he ba abe spss of he campary averaged 1% seed Spe Sktctoncebecite seer witen ot inZovs oncom paaaaae's snes ate a er ee ened enon 20 ro cic re orb grr, esas ia eecvatecetea pans coskcemwrar cme: rssh GO. calelata tne net acts for 2014, @) cnet ese eit 24 —P'png 54,000 GD Caevae the doubt! aecouns expense fo 2014 __FIT3 My 360 P 1000 (@ cause batarce of Arowanca for utes Uswun, Do, 34,2014 f @© Colcutat the net realizable value of the receivable as of Dec. 31,2014 Problem No.3 Frege essa nue he towing te nots ecm a of Decembe 1, 200: Note reehable fom sland 20000 Naw recanable fom conan 1200000 Net fecerabe om si af xpment 40,000 tn connection wih your sud, you ware able o gather he olovng ransacton dug 2070 and oer infomation persining {6 tha company's notes receivable Fa ie ond NageIndstial sot ara an. The land, purchased 10 years ao, was corres on Naga Conan rot twats of 500.000 Nag recat 8 norrtres bearing note fo PB8,000 The nots de Industria’ books a ator ino rely ovale market vabe fo the tnd, but he cient markt rata of heres fr comparable noes fs 10% cn arvary 1, 2010, Naga Industral fished consuaon serves an accepted in exchange a promissory rai aoe os 200 00,» dus date of December 31,2012, anda sated ate ofS, wih ineest ecivable ay determinable and the roe isnot realy Xie ond ofeach year, The fa value of he sonbes is ot Oe asc fo ckoumstences. be note omsiered to have an apropia imputed rat of terest of 10% ‘on January 12010, Nag Indust sod exuipment wi a caryng mount of 600.00 9 Daet Company. Ae eae gave Naga instal a P2AOD000 nt, Te nota boar anata of adobe OP eyment. Doel aa tent of PEOD000 (pi interest on the oustancing balances) The Gt payment wes ean rear 2010. Te market pce ofthe equipments not relay determinable, The prevaliog | Fate of intrest for note of this type Is 14% Round of present value factors to four decimal paces and (inal anewers o nearest peso Rey Joseph M. Redoblado | 3Accounting 21 Fi ® The consuiation ee cacces Speer aren” eS rears eee ere fens ‘December 31, 2010 8 @&) Te iter income 3 recogize in 2010 In risieawsa ee ems cecete, igs Corny hm ropa yom Pah ae Br mtn ccamacmn et, SE pace a= ss ae 208 Sab Fan fates 6% ut Flipino did nal pay ibe interest due In December 0¢ 2008, ree oun 1200 pa are oi own resucg sregeer pate tl 9F20000, — ‘ E Belge recorded accrucdintrest. ‘e000 w % Froduce the intrest rate 10 63% a 5 : & Frond the matury date of he i 2 vst dacinal pace an ral reve nent Pigs W™,m0 pote to December 31,2012.“ round off present valve factors @ apron oe yn ste ne ig trent foun be raonriza by FBbn8 OIE eee 0. 200 © spe alecount 10 be recognized on Jenvary #- 7010 16 © _}8,480 wat pe intrest income tobe recognized in 2010/8 © 26:79 va 6) sie caring amount fhe loan an December 270708 O35, e12 Problem No.5 Prot somer accounts recehable O09 ‘as 000 wore esigres to Gnorgsow aren TEST Specie cos cotter tor « Pix 470,000 Coe es and woe a ges a prcen aren aan et Thomts receivable assigned. The note Dears oat cent at 12 percent peryest: ce eee eee ee uring the tat mont, Thompson caleced 690.000 °° ‘has emited tothe fance company the cash received from finer": 694.100 1,414,600 Pii55 300 1,170,000Dr. Interest Receivable Cr. Interes: = ollected accounts of P18,500,000, 80% of which discounted payms these cash receipt were collections on the accounts receivable of December 113, as follows: P3,000,000 of accounts were paid with benefit of cash discount 1,850,000 were paid without benefit of cash discount. The remaining accounts ceivable of P150,000 were written off as uncollectible. Discount Cash 2013 W/O 150,000 2,250 Forfieted ‘ 3,000,000 45,000 Claimed 2,955,000 1,850,000 27,750 Forfieted 1,850 2014 80% 10,920,000 218,400 Claimed 10,701,600 20% 2,730,000 54,600 Forfieted 2,730,000 18,500,000 _ 18,236,600 ——Allowance Allowance Doubtful Sa for doubtful forsales accounts disc accounts discounts expense forfeited 000,000 ) 75,00 Accounts receivableyear. The fair value of th arketable. 8 impute:SL On January 1,2010, Naga Industrial sold eq quipment with a Carrying am P1,600,000 to Daet Company. As payment, Daet gave Naga | a P2,400,000 note. The note bears an interest rate of 4% and is to be r three annual installments of P800,000 (plus interest on the outsta e first payment was received on December 31, 2010. The t p - 4quipment is not reliably determinable. The prevailing rate of interest for no this type is 14% Principal nterest Total Fy 12/31/10 800,006 x4 2 785,971 12/31/11 800,0 x4 4 664. oe 12/31/12 800,000 800 x4 2 2 00 Vv , 4 9 419 2,400,000(RS RT ER On January 1,2010, Naga Industrial sold equipment with a carrying amount of P1,600,000 to Daet Company. As payment, Daet gave Naga Industrial @ P2,400,000 note. The note bears an interest rate of 4% and is to be rer three annual installments of P800,000 (plus interest on the outstanding balanc e first payment was received on December 31, 2010. The market price of the _gquipment is not reliably determinable. The prevailing rate of interest for note of this type is 14%. Principal terest ta VF PV : 2131/10 800,000 )x4 e ( 2 785,971 2/31/11 800,000 1 000x4% 64 r 664.248 31/12 800,01 «4 2,000 832,000 x 2,400,0 A Dr. Ne \ Cr 5 Cr t * Cr. iin38 Indu so ol bears an int Pent wih a caring ame op yen, Daet ga stil a "pad in ree pment 012.419 x 114) 800.000. 96 1398188 x 114) 800000 640PV of Principal 250,000 x 0.830 PV of Interest 15,000 x 2.6730 Total Dr. L Dr. Note Receivable - new Cr. Note Receivable Cr. Interest Receivable 77,000 250,000 300,000Problem No. 5 Specific customer accounts receivable totaling P1850 Georgetown Finance Company by Thompson Inc as coll e@ finance o mpany accounts receivable assigned 009 were assigned to lateral for a P1,470,000 charged a 3 percent finance charge on the total The note bears interest at 12 Percent per year. During the first month, Thompson collected P68 0,000 on the assigned accounts This amount plus one month's interest Was remitted to th company. ash 1,414,500 Finance Charge (3% x P1,850,000) 55,500 EN ND Accounts Receivable Assigned 1,850,000 Notes Payable Accounts ReceivableProblem No. 5 Specific customer accounts receivable totalin town Finance Company by Thom, loan. The finance company char: accounts receivable assigned. The 9 P1,850,000 were assigned to pSOn Inc. as collateral for a P1,470,000 ged a 3 percent finance charge on the total Note bears interest at 12 percent per year. During the first month, Thompson collected 680,000 on the assigned accounts, mitted to the finance company. This amount plus one month's interest was re} Gash 1,414,500 Finance Charge (3% x P1,850,000) 55,500 Accounts Receivable Assigned 1,850,000 Notes Payable 1,470,000 Accounts Receivable 1,850,000 Cash 680,000 Accounts Receivable Assigned 680,000 680,000 Notes Payable ; Interest Expense (P1,470,000 x 12% x 1/12) 14,700 er 0 Cash (P680,000 + P14,700) iin 20108 50183 that should be recognized oo 449 The noncurrent notes receivable as of December 31, 201 ee ag 3 On fine 4) The current portion of long-term notes receivable as of Decembe 2 ato } 6° 31, 2010 i FO 1%, 28 5) The ct interest income to be recognized in 2010 ie O94, 639 Problem No. 4 Fi a orpey se F Serove Rote receivable from Filipino Company for P300,000. The note was dated January 1 hote on December 31, 2008 ra aan interes: Is paid December 31.of each year, Filipino paid the interest on the » 2008, but Filipino did.nat pay the interest due in December Of 2009, The current effective interest rate is 6% ‘On January 1, 2010, Fitipina agrees to the following restructuring arrangement: = Reduce the principal to P250,000. — {8,000 = Forgive recorded accrued interest, = Reduce the interest rate to 6%. ae = Extend the maturity date of the note to December 31, 2012. ~ Round off present value factors to four decimal places and final answers to nearest peso. G@) The present value of the future cash flows ofthe restructured loan is 40) 995 £96815 71, 010 & The loss on impairment of loan to be recognized by Fiipina in 2010187151) O10 : ‘i 3,980 wat & The discount to be recognized on January 1,2010is =~ a Le 10,792 49) The interest income to be recognized in 2010's X {5,000 a Oeeeaae Z \ pie 25, GIL 60) The carrying amount of the loan as of December 31, 2010s X {5 0.000 Problem No. 5 . - Georgetown Finance Company by ific customer accounts receivable totaling P1,850,000 were assigned to — Tires Ine. ag collateral for a 1,470,000 loan. The finance company charged a 3 percent finance charge on .d. The note bears interest at 12 percent per year. accounts receivable assigne 's interest mnith’ During the frst month, Thompson collected P680,000 on the assigned accounts, This ammount plus one mor was remitied tothe finance company. Ree ate (6},_Deferfnine the cash received from financing. eensLAT tseeTeenNenNNENeE Prablom No, 6 On June 1, 2014, Howard Corporation needed cash t parating Needs. Howard decided to factor some of its receivables Howard fo P490,000 of receivables to Third National Bank for P416,809. An allowan doubtful accounts of 3 porcent of the receivables balance Howard, Tho bank withheld 7 percent of the purchase price a sales rolurns and allowances, Sales return totaled P1480 ) moat current maintained against the factored recelva Cash Receivable from Factor (7% ' P416,600) Allowance for Doubtful Accounts (3% ° P490,000) i Los from Factoring (P490,000 «P14,700)-P416,600 58,800 Accounts Receivable7 : ae a 3 a PR AE RES, DT Problem No. 7 On July 23, Plitt Company factored P300,000 in accounts receivable for cash | P280,000. The factor withheld 7 percent of the cash proceeds to allow for possit customer returns. An allowance for doubtful accounts of P13,000 had previous been established by Plitt in relation to these accounts. Cash 260,400 Receivable from Factor 19,600 Allowance for Doubtful Accounts 13,000 Loss from Factoring Receivables 7,000 Accounts Receivable 300,000wn Vecember 31, Central Savings & Loan discounted the following notes at 12 % {1) 3-month, P70,000, non-interest-bearing note dated October 31. - (2) 2-month, P48,000, 13 percent note dated November 30; (3) 4-month, P30,000, 10 percent note dated October 31. Maturity Value P70,000 Discount (P70,000 x 12% x 1/12) 700 Proceeds P69,300 Face P48,000 Interest Income (P48,000 x 13% x 2/12) _ 1,040 Maturity Value P49,040 Discount (P49,040 x 12% x 1/12) _-490 Proceeds Face P30,000 Interest Income (P30,000 x 10% x 4/12) _4,000 Maturity Value P31,000 Discount (P31,000 x 12% x 2/12) 620 Proceeds