Dreamer Company reported the “Receivables” account with a debit balance of P2,000,000 at year-end.

The allowance for doubtful accounts had a credit balance of P50,000 on the same date.

Subsidiary details reveal the following:

Trade accounts receivable 775,000

Trade notes receivable 100,000
Installments receivable, usually due one to two years 300,000
Customers’ account reporting credit balance arising from sales return -30,000
Advance payments for the purchase of merchandise 150,000
Customers’ accounts reporting credit balances arising from advance payments -20,000
Cash advance to subsidiary 400,000
Claim from an insurance entity 15,000
Subscriptions receivable due in 60 days 300,000
Accrued interest receivable 10,000

Compute the amount presented as “trade and other receivables” under current assets.
Answer: 1,600,000

a. Accounts receivable 775,000

Notes Receivable 100,000
Installment receivable 300,000
Advances to supplier 150,000
Advances to subsidiary 400,000
Claims receivable 15,000
Subscription receivable 300,000
Accrued interest receivable 10,000
Customer's credit balnce -30,000
Advances from customer -20,000
Receivables 2,000,000

b. Accounts receivable 775,000

Allowance for doubtful account -50,000
Notes receivable 100,000
Installment receivable 300,000
Advances to supplier 150,000
Claims receivable 15,000
Subscription receivable 300,000
Accrued interest receivable 10,000
Total Trade and other receivables 1,600,000

OKAY
at year-end.

equity

liability
liability

T
T
NT
NT
NT
NT
Valiant Company reported the following analysis of current receivables at year-end:

Trade accounts receivable 2,000,000

Allowance for doubtful accounts -100,000

Claim against the shipper for goods lost in transit in November 300,000

Selling price of unsold goods sent by Valiant on consignment at

600,000
150% of cost and not included in ending inventory

Security deposit on the lease of warehouse 200,000

3,000,000

What total amount should be reported as current trade and other receivables?
Answer: 2,200,000

Trade accounts receivable 2,000,000

Allowance for doubtful accounts -100,000
Claim against the shipper for goods lost in transit in November 300,000
2,200,000

OKAY
Jinx Corporation provided the following information for the current year with accounts receivable:

Accounts receivable, January 1 1,300,000

Credit sales 5,500,000
Sales return 150,000
Accounts that are written-off 100,000
Collections from customers 5,000,000

Estimated future sales return on December 31 50,000

Estimated uncollectible accounts per aging at

250,000
year-end

What amount should be reported as the net realizable value of accounts receivable on December 31?
Answer: 1,250,000

Accounts receivable, January 1 1,300,000

Credit sales 5,500,000
Collections from customers -5,000,000
Accounts that are written-off -100,000
Sales return -150,000
Estimated future sales return -50,000
Estimated uncollectible accounts -250,000
1,250,000

MALI mali yung 1,550,000

Scenario A. Percent of Sales:
Apple Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 5,000,000

Allowance for doubtful accounts 150,000
Sales 10,000,000

The entity estimated that 5% of the sales would be uncollected.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

2. Doubtful accounts expense = Net sales * DA%

= 10,000,000 * 0.05
= 500,000

1. Allowance for doubtful accounts, ending = ADA, beginning + Doubtful account expense for the year
= 150,000 + 500,000
= 650,000

3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 5,000,000 - 650,000
= 4,350,000

Scenario B. Percent of Accounts Receivable

Apple Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 5,000,000

Allowance for doubtful accounts 150,000

The entity estimated that 15% of the Accounts Receivable would be uncollected.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

1. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

= 5,000,000 * 15%
= 750,000

2. Doubtful accounts expense = ADA, ending - ADA, beginning

= 750,000 - 150,000
= 600,000
3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 5,000,000 - 750,000
= 4,250,000

Scenario C. Aging of Accounts Receivable

Apple Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 5,000,000

Allowance for doubtful accounts 150,000

The aging of accounts receivable as of December 31, 2020, are provided below:

Outstanding Accounts receivable Expected uncollectible

0 days 2,500,000 0%
1 – 30 days 1,500,000 5%
31 – 60 days 400,000 10%
61 – 90 days 300,000 15%
91 – 120 days 200,000 20%
Over 120 days 100,000 25%

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

1. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

ADA, ending
2,500,000 * 0 = 0
1,500,000 * 5% = 75,000
400,000 * 10% = 40,000
300,000 * 15% = 45,000
200,000 * 20% = 40,000
100,000 * 25% = 25,000
225000

2. Doubtful accounts expense = ADA, ending - ADA, beginnig

= 225,000 - 150,000
= 75,000

3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 5,000,000 - 225,000
= 4,775,000
OKAY
Scenario A. Percent of Sales:
Banana Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000
Sales 15,000,000

The entity estimated that 5% of the sales would be uncollected.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

2. Doubtful accounts expense = Net sales * DA%

= 15,000,000 * 0.05
= 750,000

1. Allowance for doubtful accounts, ending = ADA, beginning + Doubtful account expense for the year
= 300,000 + 750,000
= 1,050,000

3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 6,000,000 - 1,050,000
= 4,950,000

Scenario B. Percent of Accounts Receivable

Banana Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000

The entity estimated that 15% of the Accounts Receivable would be uncollected.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

1. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

= 6,000,000 * 15%
= 900,000

2. Doubtful accounts expense = ADA, ending - ADA, beginning

= 900,000 - 300,000
= 600,000
3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 6,000,000 - 900,000
= 5,100,000

Scenario C. Aging of Accounts Receivable

Banana Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000

The aging of accounts receivable as of December 31, 2020, are provided below:

Outstanding Accounts receivable Probability of collection Probability of non-collection

Under 15 days 3,000,000 0.96 0.04
16 – 30 days 2,000,000 0.9 0.1
31 – 45 days 400,000 0.8 0.2
46 – 60 days 300,000 0.7 0.3
61 – 75 days 200,000 0.65 0.35
Over 75 days 100,000 0 1

The accounts outstanding over 75 days have zero probability of collection.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

1. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

3,000,000 * 0.04 = 120,000
2,000,000 * 0.1 = 200,000
400,000 * 0.2 = 80,000
300,000 * 0.3 = 90,000
200,000 * 0.35 = 70,000
100,000 * 1 = 100,000
660,000

2. Doubtful accounts expense = ADA, ending - ADA, beginnig

= 660,000 - 300,000
= 360,000

3. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 6,000,000 - 660,000
= 5,340,000
OKAY
The allowance for doubtful accounts of Chico Company as of January 1, 2020, amounted to P550,000. During 2020, the com

1. Compute for the allowance for doubtful accounts as of December 31, 2020, before the year-end adjustment
= 550,000 - 250,000
= 300,000

Chico Company reported the following balances as of December 31, 2020, before any year-end adjustments:

Accounts receivable 7,500,000

Allowance for doubtful accounts ? (Answer in 1)
Sales 20,000,000

Scenario A. Percent of Sales:

The entity estimated that 5% of the sales would be uncollected.

Compute for the following:

2. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
3. Doubtful accounts expense on December 31, 2020
4. Carrying amount of the accounts receivable as of December 31, 2020

3. Doubtful accounts expense = Net sales * DA%

= 20,000,000 * 5%
= 1,000,000

2. Allowance for doubtful accounts, ending = ADA, beginning + Doubtful account expense for the year
= 300,000 + 1,000,000
= 1,300,000

4. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 7,500,000 - 1,300,000
= 6,200,000

Scenario B. Percent of Accounts Receivable

The entity estimated that 15% of the Accounts Receivable would be uncollected.

Compute for the following:

2. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
3. Doubtful accounts expense on December 31, 2020
4. Carrying amount of the accounts receivable as of December 31, 2020

2. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

= 7,500,000 * 15%
= 1,125,000

3. Doubtful accounts expense = ADA, ending - ADA, beginning

= 1,125,000 - 300,000
= 825,000

4. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 7,500,000 - 1,125,000
 = 6,375,000

Scenario C. Aging of Accounts Receivable

The aging of accounts receivable as of December 31, 2020, are provided below:

Outstanding Accounts receivable Probability of collection

Under 15 days 3,600,000 0.96
16 – 30 days 2,500,000 0.9
31 – 45 days 500,000 0.8
46 – 60 days 400,000 0.7
61 – 75 days 300,000 0.65
Over 75 days 200,000 0

Compute for the following:

2. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
3. Doubtful accounts expense on December 31, 2020
4. Carrying amount of the accounts receivable as of December 31, 2020

2. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

3,600,000 * 0.04 = 144,000
2,500,000 * 0.1 = 250,000
500,000 * 0.2 = 100,000
400,000 * 0.3 = 120,000
300,000 * 0.35 = 105,000
200,000 * 1 = 200,000
919,000

3. Doubtful accounts expense = ADA, ending - ADA, beginnig

= 919,000 - 300,000
= 619,000

4. Net accounts receivable = Accounts receivable, ending - Allowance for doubtful accounts, ending
= 7,500,000 - 919,000
= 6,581,000

OKAY
1, 2020, amounted to P550,000. During 2020, the company wrote off P250,000 of its accounts receivable.

31, 2020, before the year-end adjustment

020, before any year-end adjustments:

e year-end adjustment)

tful account expense for the year

for doubtful accounts, ending

e year-end adjustment)

for doubtful accounts, ending

 Probability of non-collection
0.04
0.1
0.2
0.3
0.35
1

e year-end adjustment)

for doubtful accounts, ending

The following accounts were abstracted from Namesake Company’s unadjusted trial balance on December 31, 2020:

Debit Credit
Accounts receivable 3,000,000
Allowance for doubtful accounts 10,000
Net credit sales 8,000,000

The entity estimated that 3% of the gross accounts receivable would be uncollectible. What amount should be reported as do
Answer: 80,000

Required allowance (3,000,000 * 3%) 90,000

Less: Credit balance in allowance 10,000
Doubtful account expense 80,000

OKAY
mber 31, 2020:

hould be reported as doubtful accounts expense for 2020?

Bestial Company’s trial balance on December 31, 2020, included the following accounts:

Debit Credit
Allowance for doubtful accounts 5,000
Sales 7,200,000
Sales return 200,000

The entity estimated uncollectible accounts receivable at 2% of net sales. What is the amount of doubtful accounts expense th
Answer: 140,000

2. Doubtful accounts expense = Net sales * DA%

= (7,200,000 - 200,000) * 2%
= 7,000,000 * 2%
= 140,000

OKAY
btful accounts expense that should be reported for 2020?
Tantrum Company provided the following information in relation to accounts receivable at year-end:

Days Outstanding Estimated Amount % Uncollectible

0 – 60 1,200,000 1%
61 – 120 900,000 2%
Over 120 1,000,000 6%
3,100,000

During the current year, the entity wrote of P50,000 in accounts receivable.

At the beginning of the current year, the allowance for uncollectible accounts was P60,000.

Under the aging method, what amount of uncollectible accounts expense should be reported for the current year?
Answer: 80,000

1. Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

1,200,000 * 1% = 12,000
900,000 * 2% = 18,000
1,000,000 * 6% = 60,000
90,000

50,000 60,000
10,000
80,000
90,000

OKAY
he current year?
Flappable Company began operations on January 1, 2017. The entity provided for doubtful accounts based on 5%of the annua

2020 2019 2018

Credit sales 15,000,000 9,500,000 8,000,000
Collections excluding recovery 11,700,000 8,200,000 6,700,000
Accounts written off during year 200,000 120,000 80,000
Recovery of accounts written off 100,000 40,000 35,000

Days Account Outstanding Amount Probability of collection Probability of non-collection

30 days or less 3,000,000 95% 0.05
Between 31 and 60 days 1,500,000 80% 0.2
Between 61 and 180 days 1,200,000 75% 0.25
Between 181 and one year 1,200,000 50% 0.5
Over one year – to be written off 100,000 0% written off

1. What amount should be reported as an allowance for doubtful accounts on December 31, 2020?
= 1,350,000

Allowance for doubtful accounts, ending = Accounts receivable, ending * DA%

3,000,000 * 0.05 = 150,000
1,500,000 * 0.2 = 300,000
1,200,000 * 0.25 = 300,000
1,200,000 * 0.5 = 600,000
written off
1,350,000

2. What amount should be reported as doubtful accounts expense for the current year?
= 500,000

2017 2018 2019

Annual credit sales 6,000,000 8,000,000 9,500,000
x Estimate percentage of doubtful accounts 5% 5% 5%
Doubtful account expense 300,000 400,000 475,000
Allowance for doubtful accounts, beginning 0 300,000 655,000
Write off 0 -80,000 -120,000
Recovery 0 35,000 40,000
Allowance for doubtful accounts, ending 300,000 655,000 1,050,000

Allowance for doubtful accounts - 2019 1,050,000

Write off -200,000
Write off (based on aging) -100,000
Recovery 100,000
Doubtful accounts expense - 2020 500,000
Allowance for doubtful accounts - 2020 1,350,000

3. What is the net realizable value of accounts receivable on December 31, 2020?
= 5,550,000
 2017 2018 2019
Annual credit sales 6,000,000 8,000,000 9,500,000
Collections -4,500,000 -6,700,000 -8,200,000
Write off 0 -80,000 -120,000
Accounts receivable, beginning 0 1,500,000 2,720,000
Accounts receivable, ending 1,500,000 2,720,000 3,900,000
Allowance for doubtful accounts -2020

OKAY
ased on 5%of the annual credit sales in prior years. On January 1, 2020, the entity changed the method of determining the allowance for d

2017
6,000,000
4,500,000
None
None
 2020
15,000,000
-11,700,000
-300,000
3,900,000
6,900,000
-1,350,000
5,550,000
mining the allowance for doubtful accounts using the aging schedule.