Trade & Other receivables:

Trade receivables – receivables from clients (AR or NR)

Other receivables – non-trade receivable collectible within a year
-          Subscriptions receivable, advances to employees, advances to suppliers,
-          Accrued revenues (interest, dividends, commission, etc.)

Initial recognition – face amount or invoice price

Subsequent: NRV
Gross Receivables xx
Less: allowances (xx)
NRV xx

Allowance for Doubtful Accounts

Income statement approach - % of Sales = Doubtful accounts expense

Balance shee = Required ending allowance

- % of AR
- Aging of AR

Notes Receivable:
Initial Subsequent
Short-tern: Interest bea FA FA
Non- interest bearing FA FA

Long-term: Int - bearing (SR = ER) FA FA

(SR<ER) PV Amortized cost PV of NP - payable lumpsum & interest payable annually
Non-Int. PV Amortized cost Prin x PV1 xx
Int. x A1 xx
PV if payable lumps PV/CA xx
Face Amount xx
Multiply by PV1
PV/ Initial CA xx

PV if payable on Installment:
Annual Payment xx
Multiply A1
PV / Initial CA xx

Loans Receivable:
Initial PV or Initial cash outflow
Subsequent: Amortized cost
Interest income: CA x ER

Receivable Financing:
Pledging -using receivables as collateral to a loan - continue to recognized the asset
and liability related to the loans; no recognition for gain or loss
Assignmenusing receivables as collateral to a loan - continue to recognized the asset
and liability related to the loans; no recognition for gain or loss
DiscountinWith recourse - loan agreement, recog. A & L
Without recourse - sale agreement, dercognized the asset and recognized
gain or loss on sale.
Factoring: Without recourse - sale agreement, dercognized the asset and recognized
With recourse - loan agreement, recog. A & L

Impairment Loss = Carrying amount - Recoverable (the higher of FV-CS and VIU)
Carrying amount = Face amount of Receivable + Accrued interest
Gross Receivable - allowance for D.A.
Value in use(VIU) = Present value of future collection of principal & interest

After Impairment:
1. Recoverable is the new CA
2. Depreciation = recoverable - residual value
remaining life
3. Recovery - maximum gain shall be the difference between the CA with Impairment and CA w/o consideration for impairment

Dr. Cr.
rest payable annually
tion for impairment
Trade receivables – receivables from clients (AR or NR)
Other receivables – non-trade receivable collectible within a year
-          Subscriptions receivable, advances to employees, advances to suppliers,
-          Accrued revenues (interest, dividends, commission, etc.)

P-1
AR - trade 800,000
NR - trade 200,000
Advances to suppliers 150,000
Claim from insurance company 30,000
Subscription receivables 150,000
Accrued interest 90,000
Allowance for doubtful accounts -60,000
Total trade and other receivables 1,360,000

P-2
#1.
Other trade AR - unassigned 750,000
Trade accounts receivable - assigned 375,000
Trade installment receivable (330 - 30) 300,000
Trade receivables from officers due currently 22,500
Trade accounts on which post-dated checks are held 75,000
Trade accounts receivable 1,522,500

#2.
Trade account receivables 1,522,500
Other receivables - current:
Advances to creditors 150,000
Interest receivable on bonds 150,000
Subscriptions receivable, due in 30 days 825,000 1125000
Current trade and other receivables 2647500

#3.
Advances to affiliated companies 375,000

P-3 Accounts Receivables

Dr.+ Cr.- Sales on account/credit:
Balance, 1/1 5,000,000 5,000,000 Collection of AR Accounts receivables
Sales on account 6,500,000 Sales
Total debit 11,500,000
Less credit -5,000,000 Collections:
Balance, 12/31 6,500,000 Cash
Accounts receivables

Inventory, beg 3,000,000

Add: Purchases 4,000,000
Goods Available for sale 7000000
Less: Ending inventory, 12/31 -1,500,000
Cost of goods sold 5500000

Sales ?7.5M
Less: cost of goods sold -5,500,000
Gross profit 2,000,000

Total sales 7,500,000

Less: cash sales -1,000,000 Cash/Sales
Sales on account 6500000 AR/Sales

Sales on account/credit:
P-4 Accounts receivables
Accounts Receivbles Sales
Dr.+ Cr.-
Bal., 1/1 3,000,000 1,000,000 Collection Collections:
Credit sales 6,000,000 200,000 Accounts written off Cash
Sales returns Accounts receivables
Total debit 9000000 1200000 Write off:
Less credit -1,200,000 Allowance for doubtful accounts
AR, 12/31 7800000 Accounts receivables

Sales returns:
Gross receivable 7,800,000 Sales returns & allowances
Less: allowance for doutful accounts 200,000 Accounts receivables
allow for future returns 75,000 -275,000
NRV 7,525,000
tful accounts
Allowance for Doubtful Accounts
Income statement approach - % of Sales = Doubtful accounts expense

Balance shee = Required ending allowance

- % of AR
- Aging of AR

Allowance for D.A. Write off:

Dr.- Cr.+ Allow. For D.A.
Write off 25,000 0 Balance AR
0 Recovery
500,000 D.A. expense Recovery:
500,000 Total credit AR
-25,000 Less debit Allow for D.A.
475,000 Ending balance
Cash
AR

Provision for D.A.:

D.A. expense
Allowance for D.A.
P-5
Allowance for D.A.
Dr.- Cr.+
Write off 0 Balance
0 Recovery
D.A. expense
0 Total credit
Less debit
0 Ending balance

Allowance for Doubtful Accounts

Income statement approach - % of Sales = Doubtful accounts expense

Balance shee = Required ending allowance

- % of AR
- Aging of AR

P-6
#1.
Sales 15,000,000
Less sales returns and allowances -700,000
Net sales 14300000
Multiply by the bad debt rate x 1 1/2%
Doubtful accounts expense 214,500

#2.
Accounts receivable, 12/31 17,500,000
Less: amounts estimated to be uncollectible -1,800,000
Net realizable value 15700000

#3.
Allowance for D.A.
Dr.- Cr.+
Write off 300,000 170,000 Balance
80,000 Recovery
630,000 D.A. expense(21M x 3%)
880000 Total credit
-300,000 Less debit
580000 Ending balance

#4.
Accounts receivable, 12/31 ?10.1M
Less: allowance for doubtful accounts, 12/31 -600,000
Net realizable value 9,500,000

Doubtful accounts expense 840,000

Less: write off -240,000
Allow. For D.A., 12/31 600000

#5.
Accounts receivable, 12/31
Percentage
Required allowance

Allow for D. A.
Dr. Cr.
Bal. before adj. 100,000 ?223,0 D. A. expense
-100,000 Less debit
123,000 Required ending allow (4,1M x 3%)

P-7
#1.
Beg. Inventory 0
Add purchases 9,000,000
Goods available for sale 9000000
Less ending inventory -1,500,000
Cost of goods sold 7500000
#2.
Sales 140% ?10.5M (7.5M x 140%)
Less: Cost of goods sold -100% 7,500,000
Gross Profit (Margin/Markup) 40% 3M

Sales 10,500,000
% on account x 80%
Sales on account 8,400,000 AR/Sales

#3.
Accounts receivable, 12/31 7,750,000
Less: allowance for doubtful accounts, 12/31 -370,000
Net realizable value 7380000

Accounts Receivable
Dr.+ Cr.-
Sales on account 8,400,000 600,000 Collections Cash/AR
50,000 Write off Allow/AR
Total debit 8,400,000 650,000
Less credit -650,000
Bal., 12/31 7,750,000

Allowance for D. A.
Dr.- Cr.+
Write off 50,000 420,000 Provision for D.A. expense (8.4M x 5%)
-50,000 Less debit
370,000 Ending allowance, 12/31
P-8
#1.
Sales ?7.2
Less cost of goods sold -5,040,000
Gross Profit 2,160,000

Beg. Invty 2,880,000

Add: Purchases(net) 4,800,000
Goods available for sale 7,680,000
Less: Ending inventory -2,640,000
Cost of goods sold 5,040,000

#2.
Accounts Receivables
Dr. Cr.
Beg. Bal., 1/1/ 1,920,000 6,240,000 Collections
Sales on account 6,000,000
Total debit 7920000 6240000
Less credit -6,240,000
Ending bal, 12/31 1680000

Total sales 7,200,000

Less: cash sales -1,200,000
Sales on account 6000000

P-9
#1.
Trade accounts receivable (current) 3,440,000
Past due - trade accounts 640,000
Notes receivable dishonored 240,000
Consignment goods already sold(160,000 x 90%) 144,000
Total trade receivables 4464000

#2.
Adjusted trade receivables 4,464,000
Less due from consignees -144,000
Basis of allowance for D. A. 4320000
Rate x 5%
Required allowance 216,000

#3.
Allowance for D.A.
Dr.- Cr.+
Write off 128,000 80,000 Balance
 0 Recovery
?264 D.A. expense
344,000 Total credit
-128,000 Less debit
216,000 Ending balance
Notes Receivable:
Initial Subsequent
Short-tern: Interest bearing FA FA
Non- interest bearing FA FA

Long-term: Int - bearing (SR = ER) FA FA

(SR<ER) PV Amortized cost
Non-Int. PV Amortized cost

PV if payable lumpsum
Face Amount xx
Multiply by PV1 1.08//=
PV/ Initial CA xx =
=
PV if payable on Installment: =
Annual Payment xx = PV1 0.68
Multiply A1 -1
PV / Initial CA xx /.08
A1 3.99
PV of NP - payable lumpsum & interest payable annually
Prin x PV1 xx
Int. x A1 xx
PV/CA xx

P - 10
LT non-interest bearing, payable on installment basis
Initial: Present value
Subsequent/BS: Amortized cost

#1.
Installment payment 500,000
Multiply by A1 factor x 3.99
PV/Initial carrying amount 1,995,000

#2.
Annual Interest Carrying
Date Payment Income 8% Principal amount
12/31/21 1,995,000
12/31/22 500,000 159,600 340,400 1,654,600
12/31/23 500,000 132,368 367,632 1,286,968

P -11
#1.
Installment payment 500,000
Multiply by A1 factor x 5.650
PV/Initial carrying amount 2,825,000

#2.
Selling price / PV of notes 2,825,000
Carrying amount of equipment -2,000,000
Gain (loss) 825,000

#3.
Annual Interest Carrying
Date Payment Income 12% Principal amount
12/31/21 2,825,000
12/31/22 500,000 339,000 161,000 2,664,000
12/31/23 500,000 319,680 180,320 2,483,680

P - 12
LT non-interest bearing payable lumpsum:
Initial: Present value
Sub./BS: Amortized cost

Face amount of notes 1,000,000

PV1 x .712
Initial CA 712,000

#1,3&4
Interest Carrying
Date Income 12% Amount
1/1/2021 712,000
12/31/21 85,440 797,440 Disc on NR 85,440
12/31/22 95693 893,133 Interest Income 85,440
12/31/23 106,867 1,000,000
#2.
Selling price / PV of notes 712,000 NR 1,000,000
CA of equipment -800,000 loss on sale 88,000
Gain (loss) -88000 Disc on NR 288,000
Equiptmen 800,000

P - 13
LT interest-bearing, interest payable every year (SR<ER)
Initial: Present value
Sub./BS: Amortized cost

#1.
Face amount at PV1 (600,000 x .75132) 450,792
Interest at A1 (600,000 x 5% = 30,000 x 2.48685) 74,606
Present value / Initial CA 525,398

#2.
Face amount 600,000
Present value -525,398
Discount on NR 74,602
#3 & 4.
(FA x SR) CA x ER) Amortization Carrying
Date SR 5% ER 10% of Discount Amount
12/31/19 525,398
12/31/20 30,000 52,540 22,540 547,938
12/31/21 30,000 54,794 24,794 572,732

P - 14
LT interest-bearing notes:
Initial: Face amount
Sub/BS: Face amount

Annual Interest Carrying

Date Payment Income 11% Principal Amount
1/7/2021 2,800,000 12/31/21
1/7/2022 902,500 308,000 594,500 2,205,500 12/31/22
1/7/2023 902,500 242,605 659,895 1,545,605
Current NC

#2.
Jan - June ' 22 (308,000 x 6/12) 154,000
July - Dec. '22 (242,605 x 6/12) 121,303
275,303

P - 15
LT non-interest bearing, payable on installment basis
Initial: Present value
Subsequent/BS: Amortized cost

#1.
Installment payment 20,000
Multiply by A1 factor x 1.7591
PV/Initial carrying amount 35,182
Down Payment 10,000 Cash 10,000
Selling price 45,182 NR 40,000
CA of machine -40,000 A.D. 50,000
Gain (loss) 5,182 Disc on NR 4,818
Mach 90,000
#2. Gain 5,182
Annual Interest Carrying
Date Payment Income 9% Principal amount
12/31/21 35,182
12/31/22 20,000 3,166 16,834 18,348
P - 16
LT non-interest bearing payble lumpsum
Initial: Present value
Sub/BS: Amortized cost

Face amount 1,300,000

PV1 x .712
PV/Initial CA 925,600

Selling Price / PV of notes 925,600

Less: CA of equipment -739,000
Gain (loss) 186600

#2.
CA of Notes receivable 925,600
Multiply by the ER x 12%
Interest income 111,072

Date Int. Inc 12% CA

01/01/yr1 925,600
12/31/yr1 111,072 1,036,672
Receivable Financing:
Pledging - using receivables as collateral to a loan - continue to recognized the asset
and liability related to the loans; no recognition for gain or loss
Assignment- using receivables as collateral to a loan - continue to recognized the asset
and liability related to the loans; no recognition for gain or loss
Discounting: With recourse - loan agreement, recog. A & L
Without recourse - sale agreement, dercognized the asset and recognized
gain or loss on sale.
Factoring: Without recourse - sale agreement, dercognized the asset and recognized gain or loss
With recourse - loan agreement, recog. A & L

P - 17 D
No gain or loss is recognized because assignment of accounts receivable
is a secure borrowing and not a sale

P - 18
#1.
Notes Payable 2,500,000 Cash 2.375,000
Finance fee (5% x 2,500,000) -125,000 Fin. Charges 125,000
Cash received - 12/1 2375000 NP-bank 2,500,000

#2. AR - assigned 3,100,000

Notes Payable 2,500,000 AR 3,100,000
Remittances 950,000
Interest (2.5M x 12% x1/12) -25,000 -925,000 Cash 950,000
Notes Payable - 12/31 1575000 Sales disc 50,000
AR - ass 1,000,000
#3.
AR - assigned (3.1M - 1M) 2,100,000 A NP 925,000
NP - 12/31 -1,575,000 L Int. Exp 25,000
Equity on assigned accounts 525000 Disclosed Cash 950,000

P - 19
Face value 3,000,000
Add: Interest (3M x 10%) 300,000
Maturity value 3,300,000 Contingent liability

The contingent liability is equal to the principal or face value

of the note receivable discounted plus interest.(Maturity value)
P - 20
#1.
Principal 2,000,000
Add: Interest till maturity (2M x 10% x 6/12) 100,000
Maturity value 2100000
Less: Discount (2.1M x 12% x 6/12) -126,000 MV x DR xDP
Proceeds 1974000

#2.
Proceeds / Selling price 1,974,000
Less: CA of notes
Principal 2,000,000
Add: Accrued interest 0 -2,000,000
Gain (loss) -2000000

P - 21
#1.
Principal
Add: Interest till maturity (6M x 15% x 90/360)
Maturity value 0
Less: Discount (6,225,000 x 18% x 60/360)
Proceeds 0

#2.
Proceeds / Selling price
Less: CA of notes
Principal
Add: Accrued interest
Gain (loss)/ Interest expense 0

P - 22
Selling price
CA of accounts receivable:
Gross
Less: Allowance for D.A.
Gain (loss) on factoring 0

P - 23
Selling price
CA of accounts receivable:
 Gross
Less: Allowance for D.A.
Gain (loss) on factoring 0

P - 24
#1.
Gross receivable
Less: Factor's holdback (5M x 5%)
Finance charges (5M x 3%)
Interest (5M x 15% x 54/365)
Proceeds 0

#2.
Finance charges
Interest
Total cost of factoring 0

P - 25
#1.
Notes Payable
Finance fee (2% x 750,000)
Cash received - 12/1 0

#2.
Net collection (210,000 - 3,500)
Interest (680,000 x 12% x 1/12)
Total payment 0

P - 26
#1.
Notes Payable
Finance fee (5% x 3,000,000)
Cash received - 12/1 0

#2.
Notes Payable
Remittances
Interest
Notes Payable - 12/31 0
#3.
AR - assigned
Collection
Sales discount
Sales return
Accounts written off
AR - assigned, 12/31 0

#4.
AR - assigned (3M - 1M0
NP - 12/31
Equity on assigned accounts 0
Loans Receivable:
Initial PV or Initial cash outflow
Subsequent: Amortized cost
Interest income: CA x ER

P - 27
#1.
Principal
Direct origination cost incurred
Less origination fee received
Initial CA 0

#2 & 3.
(CA x ER) FA x SR) Amortization Carrying
Date ER 15% SR 10% of discount Amount
1/1/2022 0
12/31/22 0 0

P - 28
#1.
Principal
Direct origination cost incurred
Less origination fee received
Initial CA 0

#2.
Using trial and error the correct answer is - ER of 12%
PV of pricipal (5,000,000 x .5674)
PV of interest (5,000,000 x 3.6048)
PV / Initial carrying amount 0

#3 & 4.
(CA x ER) FA x SR) Amortization Carrying
Date ER 12% SR 10% of discount Amount
1/1/2022 0
12/31/22 0 0

P - 29
#1.
Principal
Direct origination cost incurred
Less origination fee received
Initial CA 0

#2 - 4.
(CA x ER) FA x SR) Amortization Carrying
 Date ER 6% SR 8% of discount Amount
1/1/2022 0
12/31/22 0 0
12/31/23 0 0
Impairment Loss = Carrying amount - Recoverable (the higher of FV-CS and VIU)
Carrying amount = Face amount of Receivable + Accrued interest
Gross Receivable - allowance for D.A.
Value in use(VIU) = Present value of future collection of principal & interest

After Impairment:
1. Recoverable is the new CA
2. Depreciation = recoverable - residual value
remaining life
3. Recovery - maximum gain shall be the difference between the CA with Impairment and CA w/o consideration for impairment

P - 30
Loans Receivable
Add accrued interest (8,000,000 x 11%)
Carrying amount, 12/31/23 0
Recoverable (VIU)old rate 11%
PV ofPrincipal: 2024 (700,000 x .90)
2025 (1,200,000 x .81)
2026 (3,000,000 x .73)
2027 (4,000,000 x .66)
PV of Interest: 0 0
Impairment loss 0

#2.
CA/ Recoverable
Multiply by the ER x 11%
Interest income

P - 31
Principal
Accrued interest 0
CA of loans receivable, 12/31/22 0
Recoverable (VIU) 10%
PV of Principal (6,300,000 x .75)
PV of interest (252,000 x 2.49) 0
Impairment loss 0

P -32
Principal
Accrued interest
CA of loans receivable, 12/31/22 0
Recoverable (VIU) 10%
PV of Principal (4,000,000 x .83)
PV of interest (320,000 x 1.74) 0
Impairment loss 0
P - 33
#1.
Statement of Financial Position: Asset is presented at the lower of carrying amount
or recoverable
Recoverable (lower)

Carrying amount
Recoverable (VIU) (300,000 x .8772)
Impairment loss 0

P - 34
Banana
Grapes
All other receivables (1,680,000 + 2,100,000 + 6,500,000) x 5%
Total impairment loss 0

P - 35
Joshtin House
Jerome Hotel
All other receivables (4,000,000 + 3,900,000) x 5% =
Total impairment loss 0
nsideration for impairment