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HW # 2
ACT 123 April 26, 2017
EASY
SOLUTION:
ADA, beg 280,000
Recovery 50,000
DAE (SQUEEZE) 100,000
Written off (230,000)
ADA, END 200,000
SOLUTION:
ADA, beg (4,800,000 – 4,725,000)
75,000
Recovery of accounts written off in previous year
40,000
Doubtful accounts expense 2016(SQUEEZE)
195,000
Written off (160,000)
ADA, end (5,250,000 – 5,100,000)
150,000
DOMALAON, Lorie Jae E. HW # 2
ACT 123 April 26, 2017
3. Umaasa Company used the allowance method of accounting for
uncollectible accounts. During the current year, the entity had charged
P 800,000 to bad debt expense, and wrote off accounts receivable of P
900,000 as uncollectible.
What was the decrease in working capital? P 800,000
SOLUTION: only the bad debt expense decreases working capital
MODERATE
At December 31, 2011, how much should Pagod’s total current net
receivables? P 235,000
SOLUTION:
Trade accounts receivable 232,500
Allowance for uncollectible accounts (5,000)
Claim receivable 7,500
Total current net receivables P 235,000
HARD
SOLUTION:
DOMALAON, Lorie Jae E. HW # 2
ACT 123 April 26, 2017
AR, beg 1,950,000
Credit Sales 8,100,000
Collections P 7,125,000
Written-off 187,500 (7,312,500)
AR, end 2,737,500
Uncollectible accounts (247,500)
Amortized cost ( net cash inflow) P
2,490,000