2.

The following information was obtained from the unadjusted trial balance of the Pie
Corporation for the year ending December 31, 2020:
           Accounts Receivable                                            P 2,500,000 Dr
           Allowance for Doubtful Accounts                            34,000 Dr
           Sales (90% are on credit)                                        8,400,000 Cr

Instructions:   Determine the following:

1.Doubtful account expense assuming that 6% of the accounts receivable are estimated to be
uncollectible.

2.Amortized cost of accounts receivable.

Answer:

Requirement 1

Doubtful account expense = Accounts Receivable x 6% = 2500000 x 6% = 150000 + 34000

= 184000

Allowance for Doubtful Accounts = 34000 Dr.

Doubtful account expense Dr. 184000 ;

Allowance for Doubtful Accounts Cr. 184000

Requirement 2

Amortized cost of accounts receivable.= Accounts Receivable - Allowance for Doubtful

Accounts = 2500000 - 184000 = P 2316000