Professional Documents
Culture Documents
BSA-3 [45227]
Demo, Inc.
Requirement (a): Audit work papers for the accounts receivable and the allowance for doubtful accounts as of December 31, 2017.
ETC, Co.
Required
Aging Distribution Adjustment Adjusted Balance Rate Allowance
Current 1,737,690.00 122,500 = 1,860,190.00 2% 37,203.80
Past due:
1 - 30 days 1,617,340.00 = 1,617,340.00 5% 80,867.00
143,770.6
31 - 60 days 1,437,706.50 = 1,437,706.50 10% 5
221,167.5
61 - 90 days 1,474,450.00 = 1,474,450.00 15% 0
Over 90 days 1,779,867.50 37,500
288,430.5
(375,215) = 1,442,152.50 20% 0
771,439.4
7,831,839.00 5 (A)
Ling, Inc.
(2) Non-interest bearing note, net of imputed interest at Dec. 31, 2017
105,000
Requirement (1): Prepare the long-term receivables section of Ling's balance sheet at December 31, 2017.
9% note receivable from sale of division, due in annual installments of P500,000 to May 1, 2018, less current installment 500,000
8% note receivable from officer, due December 31, 2018, collaterized by 10,000 shars of Ling, Inc. ordinary shares 400,000
Non-interest bearing note from sale of patent, net of 15% imputed interest, due April 1, 2018 84,105
Installment contract receivable, due in annual installments of P50,000 to July 1, 2020, less current installment 112,400
Requirement (2): Prepare a schedule showing the current portion of the long-term receivables and accrued interest that would appear in
Ling's balance sheet at December 31, 2017.
Total 527,600
Accrued interest:
Note receivable from sale of division 60,000
Total 71,200
Requirement (3): Prepare a schedule showing interest income from the long-term receivables and gain recognized on sale of assets that
would appear on Ling's income statement for the year ended December 31, 2017.
Interest income:
Total 156,705
Patent 37,600
Land 50,000
Total 87,600
Grande Company
Requirement (1): What entries should be made in the records of Grande Company on December 31, 2017?
Carrying value of note and interest 106,000
Less: Due on Dec. 31, 2019 (P30,000 x 0.89) (26,700)
Due on Dec. 31, 2021 (P30,000 x 0.7921) (23,763) (50,463)
Impairment writedown 55,537
Requirement (2): Assume that Grande Company collects expected payments from XYZ. What entries should be made on December 31, 2018, 2019,
2020 and 2021?
Cash 30,000
Notes Receivable 30,000
Cash 30,000
Notes Receivable 30,000
Allowance for Decline in Note Value 46,000
Notes Receivable 46,000