FINANCIAL ACCOUNTING REVIEW Accounts Receivable

Problem 1 (3-8)

On January 1, 2016, Pau Company sold a piece of land
with a carrying amount of Php12,000,000 in exchange for
a 5% promissory note with face amount of
Php15,000,000. The note is payable in annual installment
of Php5,000,000 plus accrued interest on the outstanding
balance. The first installment is due on December 31,
2016. There is no established cash price for the land and
the note has no ready market. The prevailing interest rate
for a note of this type is 10%.

Required:

a. Prepare an amortization table (2016 to 2018)

b. Prepare all entries to record the transactions from January 1, 2016 to December 31, 2018

The note is interest-bearing, but the rate of interest of the note (5%) is unreasonably lower than the prevailing rate (10%) for similar obligation. The present
value of the note is determined as follows:
5 M + (5% x 15 M) = 5,750,000 x 0.9091 P5,227,325
5 M + (5% x 10 M) = 5,500,000 x 0.8264 4,545,200
5 M + (5% x 5 M) = 5,250,000 x 0.7513 3,944,325
Total P13,716,850

Problem 2 (3-6)

On January 1, 2016, Mari Company sold a tract of land that was acquired several years ago for Php5,600,000. Mari Company
received a three-year, non-interest bearing note for Php12,000,000 in exchange for land . There is no readily available
market value for the land but the current market rate of interest for comparable notes is 15%. The note is payable in equal
annual installments of Php4,000,000 every December 31, starting December 31, 2016. Present value of 1 for three periods at
15% is 0.6575. Present value of an ordinary annuity of 1 for three periods at 15% is 2.2832.

Required:
a. What is the amount of interest revenue recognized in Mari Company’s income statement from 2016 to 2018?
b. What is the carrying amount of the note at December 31, 2016 and 2017?
c. What amounts of the note shall be classified as current assets and non-current assets at December 31, 2016 and
2017?

FV Php 12,000,000
PV (4,000,000 x 2.2832) 9,132,800
---------------------------
Discount on Notes receivable 2,867,200
===============

Notes Receivable 12,000,000

Land 5,600,000
Gain on sale of land (9,132,800-5,600,000) 3,532,800
Discount on Notes Receivable 2,867,200

Effective Interest Principal Carrying Value

1/12016 9,132,800
2016 9,132,800x15%=1,369,920 4,000,000 6,502,720
2017 6,502,720x15%= 975,408 4,000,000 3,478,128
2018 3,478,128x15%= 521,719
521,872 -

Problem 3 (3-4): Camil Company completed the following transactions during the year 2016:

Jan 14 Wrote off the account of Mayet Company for Php20,000 that arose from sale in
July 2015.

July 31 Received a Php24,000, 90-day 10% note from Pau Company for merchandise
sold.

Aug 15 Received a Php40,000 cash plus Php30,000 note from Bulacan Company for merchandise sold. The note
is dated August 15 and bears interest at 12%, and matures in 120 days.
Nov 1 Completed a Php40,000 credit card sale with a 4% fee. Cash is received
Immediately from the credit card company.

Nov 4 Pau Company refuses to pay the note that was due to Camil Company.

Nov 5 Completed a Php18,000 credit card sale with a 5% fee. The amount due from the
 credit card company was received on November 9.

Nov 15 Received the full amount of Php20,000 from Mayet Company that was previously
written off on January 14.

Dec 13 Received payment of principal plus interest from Bulacan Company for the
August 15 note.

Required: Prepare journal entries to record the transactions on Camil Company’s books.

July 14 Allowance for Doubtful Accounts 20,000

Accounts Receivable-Moret Co. 20,000
31 Notes Receivable 24,000
Sales 24,000
Aug. 15 Cash 40,000
Notes Receivable 30,000
Sales 70,000
Nov. 1 Cash 38,400
Credit Card Service Charge 1,600
Sales 40,000
4% x 40,000 = 1,600
Nov. 4 Accounts Receivable-Pau Company 24,600
Notes Receivable 24,000
Interest Revenue 600
24,000 x .10 x 90/360 = 600
5 Accounts Receivable-Credit Card 18,000
Sales 18,000
Nov. 9 Cash 17,100
Credit Card Service Charge 900
Accounts Receivable-Credit Card 18,000
5% x 18,000 = 900
Nov. 15 Accounts Receivable-Moret Co. 20,000
Allowance for Doubtful Accounts 20,000
Nov.15 Cash 20,000
Accounts Receivable-Moret Co. 20,000
Dec. 13 Cash 31,200
Notes Receivable 30,000
Interest Revenue 1,200
30,000 x 12% x 120/360 = 1,200

Problem 4 (3-10)

The statement of financial position of Honda Inc. shows the Accounts Receivable balance at December 31, 2016 as follows:

Accounts receivable Php 900,000

Allowance for doubtful accounts 18,000

During 2017, transactions relating to the accounts were as follows:

1. Sales on account, Php9,600,000.
2. Cash received from collection of current receivable totaled Php7,840,000 after discounts of Php160,000 were
allowed for prompt payment.
3. Credit memo issued to customers for sales returns , Pho120,000.
4. Customers’ accounts of Php40,000 were ascertained worthless and written off.
5. Recovered Php10,000 of accounts written off prior to 2017.
6. Received a 90-day, 12% note for Php50,000 from a customer on an overdue account.
7. Accounts receivable of Php1,400,000 have been pledged to a bank on a loan of Php800,000. Collections of
Php300,000 were made on these receivables (not included in the collections previously given) and applied as partial
payment to the loan.
8. Based on assessment of the impairment of receivables, it is estimated that allowance for doubtful accounts should be
Php118,000 at December 31.
9. Recorded the accrued interest on the note in no. 6. The note was dated December 1, 2017.

Required:

Prepare journal entries to record the foregoing transactions. After preparing the journal entries , determine the amortized cost
of the accounts receivable at December 31, 2017.

a. Accounts receivable 9,600,000

Sales 9,600,000

b. Cash 7,840,000
Sales discounts 160,000
Accounts receivable 8,000,000
c. Sales returns 120,000
Accounts receivable 120,000
d. Allowance for uncollectible accounts 40,000
Accounts receivable 40,000
e. Accounts receivable 10,000
Allowance for uncollectible accounts 10,000
Cash 10,000
 Accounts receivable 10,000
f. Notes receivable 50,000
Accounts receivable 50,000
g. Cash 800,000
Notes payable-bank 800,000
Cash 300,000
Accounts receivable 300,000
Notes payable-bank 300,000
Cash 300,000
h. Uncollectible accounts expense 130,000
Allowance for uncollectible accounts 130,000
18,000 – 40,000 + 10,000 = 12,000 debit
118,000 + 12,000 = 130,000
i. Interest receivable 500
Interest revenue 500
50,000 x 12% x 30/360
Accounts receivable
(900,000+9,600,000–8,000,000–120,000 - 40,000–50,000–300,000) P1,990,000
Less Allowance for uncollectible accounts 118,000
Amortized cost of accounts receivable P1,872,000

Problem 5 (3-14)

Pau Company has an Allowance for doubtful accounts balance of Php68,000 at January 1, 2017. During 2017, accounts
totaling Php94,000 were written off. Accounts written off in prior years amounting to Php14,000 were recovered during the
year. At December 31, 2017, an aging of its accounts receivable showed:
Amount Probability of Collections
Not yet due Php 340,000 100%
1-30 days past due 240,000 95%
31-60 days past due 20,000 75%
61-90 days past due 30,000 50%
Over 90 days past due 24,000 10%
Additional accounts to be written off 6,000
Required:

Show computations for the following:

a. Doubtful accounts expense for the year 2017.
b. Allowance for doubtful accounts as of December 31, 2017.
c. Amortized Cost of Accounts Receivable at December 31, 2017.

(a) Allowance for Uncollectible Accounts, January 1, 2017 P 68,000

Accounts written off (94,000)
Recovery of accounts previously written off 14,000
Additional accounts written off (6,000)
Allowance for Uncollectible Accounts, December 31, 2017
before adjustments (debit balance) (P18,000)
Required balance in Allowance account based on aging
(5% x 240,000) + (25% x 20,000) + (50% x 30,000)
+ (90% x 24,000) 53,600
Required adjustment/Uncollectible Accounts Expense for 2017 P71,600

(b) Accounts Receivable, December 31, 2017 P654,000

Less Allowance for Uncollectible Accounts 71,600
Net amortized cost P582,400

Problem 6 (3-13)

The balances of selected accounts taken from the December 31, 2016 statement of financial position of Pau Company are as
follows:

Accounts receivable Php 674,000

Allowance for doubtful accounts 24,000

The following transactions affecting accounts receivable occurred during the year ending December 31, 2017 (in
summary):

Sales (all on account, terms: 2/10, 1/15, n/60) Php 3,000,000

Cash received from customers 3,200,000
From customers paying within the 10-day
discount period 1,764,000
From customers paying within the 15-day
discount period 990,000
From recovery of accounts written off 6,000
From customers paying beyond the discount period ?
Accounts receivable written off as worthless 22,000
Credit memorandum for sales returns 12,000
Based on assessment of the collectability of the accounts, impairment loss recognized on accounts receivable is Php30,000.

Required:

Compute Accounts Receivable and Allowance for Doubtful Accounts at December 31, 2017.

Accounts Receivable, December 31, 2016 P 674,000

Sales on account during 2017 3,000,000
Cash received from customers (3,200,000)
Cash discounts allowed: (1,764,000 ÷ 98%) x 2% ] P36,000
(990,000 ÷ 99%) x 1% 10,000 (46,000)
Recovery of accounts written off 6,000
Accounts written off as worthless (22,000)
Credit memoranda for sales returns (12,000)
Accounts Receivable, December 31, 2014 P 400,000

Allowance for Uncollectible Accounts, December 31, 2016 P 24,000

Recovery of accounts written off 6,000
Accounts written off as worthless (22,000)
Impairment loss on receivables 30,000
Allowance for Uncollectible Accounts, December 31, 2017 P 38,000

The computation may also be conveniently done through T-accounts, as follows:

Accounts Receivable
Balance, beg 674,000 Collections 3,200,000
Sales on account 3,000,000 Cash discounts 46,000
Recovery 6,000 Write off 22,000
Sales returns 12,000
Total 3,680,000 Total 3,280,000
Balance, end 400,000

Allowance for Uncollectible Accounts

Write off 22,000 Balance, beg 24,000
Recovery 6,000
Impairment 30,000
Total 22,000 Total 60,000
Balance, end 38,000

Problem 7 (3-15)

The financial statements of Mari Company reported the following selected accounts.

Accounts receivable, January 1, 2017 Php 2,400,000

Allowance for doubtful accounts, Jan. 1, 2017 120,000
Sales during 2017 20,000,000
Cash collected from customers 17,440,000

The cash collected from customers included a Php40,000 recovery from a customer whose account was written off in prior
year. On November 15, a customer settled his overdue by issuing a 15%, 4-month note for Php800,000. During 2017,
accounts of Php200,000 were written off as worthless.

Analysis of the accounts receivable at December 31, 2017 revealed that Php1,200,000 were considered pas due.
Management’s estimate of probable loss on past due accounts is 20% and on current account at 5%.

Required:

1. Adjusted balance of Allowance for Doubtful Accounts at December 31, 2017.

2. Doubtful Accounts expense for year 2017.
3. Net Realizable Value of Accounts Receivable, December 31, 2017.

a) Accounts Receivable, January 1 P 2,400,000

Sales during 2017 20,000,000
Cash collected from customers (17,440,000)
Recovery of accounts previously written off 40,000
Note received in settlement of an account ( 800,000)
Accounts written off as worthless ( 200,000)
Accounts Receivable, December 31 P 4,000,000
Accounts Receivable, December 31 P 4,000,000
Past due accounts 1,200,000
Current accounts/Not yet past due P 2,800,000
Adjusted balance of Allowance for Uncollectible Accounts
20% x1,200,000 past due accounts P 240,000
5% x 2,800,000 current accounts 140,000
Total P 380,000
(b) Adjusted Allowance for Uncollectible Accounts, Dec. 31, 2017 P380,000
Accounts written off during the year as worthless 200,000
Recovery of accounts previously written off (40,000)
 Allowance for Uncollectible Accounts, January 1, 2014 (120,000)
Uncollectible Accounts Expense for year 2014 P420,000
(c) Accounts Receivable P4,000,000
Less Allowance for Uncollectible Accounts 380,000
Amortized cost of accounts receivable, December 31, 2014 P3,620,000

Problem 8 (3-20) Mari Company completed the following selected transactions during 2017:

May 1 Assigned accounts of Php4,000,000 to Kapamilya Bank under a notification

basis. Kapamilya Bank made an advance of 75% and deducted a 6% finance
charge based on the amount advanced.

May 31 Received notice from Kapamilya Bank that Php2,000,000 assigned accounts
had been collected, and that Kapamilya Bank charged Mari Company 12% interest. The collection is
applied first to interest, and the balance is applied to principal.
June 30 Received notice from Kapamilya Bank that Php1,600,000 had been collected.
Kapamilya Bank remitted to Mari Company the amount due to the latter, after deducting 12% interest on
the loan balance.
Required:
Prepare journal entries in the books of Mari Company to record the foregoing transactions.
May 1 Accounts Receivable Assigned 4,000,000
Accounts Receivable 4,000,000
1 Cash (4,000,000 x 75% x 94%) 2,820,000
Finance Charges (3,000,000 x 6%) 180,000
Notes Payable (4,000,000 x 75%) 3,000,000
31 Interest Expense (3.0M x 0.12 x 1/12) 30,000
Notes Payable 1,970,000
Accounts Receivable Assigned 2,000,000
June 30 Notes Payable 1,030,000
Interest Expense (1,030,000 x 0.12 x 1/12) 10,300
Cash 559,700
Accounts Receivable Assigned 1,600,000

Problem 9 (3-19)
Camil Company had the following transactions during 2017:
October 1 Camil Company assigned Php10,000,000 of accounts receivable to a
bank in consideration of a loan. The bank advanced 80% of the assigned accounts receivable less
service charge of 5% based on the amount of the loan. Customers were not notified of the
assignment, thus, Camil Company continues to make the collection.
21 Camil company issued a credit memo to a customer, whose account is
assigned with the bank, for defective merchandise returned amounting to Pho400,000.
31 Assigned accounts of Php5,000,000 were collected, less 2% discount.
November 1 Remitted Php5,000,000 to the bank plus interest for one month at a rate
of 12% per year.
15 Assigned accounts amounting to Php100,000 were found to be worthless and were written off.
30 Collections of Php4,000,000 were made from the assigned accounts.
December 1 Paid the balance due to the bank, plus 12% interest. The balance in the
assigned accounts, if any, is reverted to unassigned accounts after the final settlement with the
bank.
Required: Journal entries to record the foregoing transactions.
Oct 1 Accounts Receivable Assigned 10,000,000
Accounts Receivable 10,000,000
1 Cash 7,600,000
Finance Charges 400,000
Notes Payable – Bank 8,000,000
 5% x 8,000,000 = 400,000
21 Sales Returns and Allowances 400,000
Accounts Receivable Assigned 400,000

31 Cash 4,900,000
Sales Discounts 100,000
Accounts Receivable Assigned 5,000,000
2% x5,000,000 = 100,000

Nov. 1 Notes Payable – Bank 5,000,000

Interest Expense (8M x 0.12 x 1/12) 80,000
Cash 5,080,000
15 Allowance for Uncollectible Accounts 100,000
Accounts Receivable Assigned 100,000
31 Cash 4,000,000
Accounts Receivable Assigned 4,000,000
Sept. 1 Notes Payable – Bank 3,000,000
Interest Expense (3,000,000 x 0.12 x /12) 30,000
Cash 3,030,000
1 Accounts Receivable 500,000
Accounts Receivable Assigned 500,000

Problem 10 (3-16)
Kapuso Bank has a Php20,000,000 loan to Camil Realty, which was invested by the latter in real estate development. Due to
the economic downtrend in the real estate business, Camil Realty is experiencing declining sales and is likely to default on its
obligation to Kapuso Bank. Camil Realty requests for a restructuring of its loan with Kapuso Bank. Prevailing market rate of
interest for similar obligations at the time of restructuring is 8%. Accrued interest receivable on the loan at December 31,
2016 is Php2,000,000, based on stated interest rate of 10%.
For each of the following alternative restructuring arrangements, determine the amount of the impairment loss to be
recognized by Kapuso Bank , and give the entry in the books of the company to record impairment. (Round off present
value factors to four decimal places)

Alternative 1
) Reduction of principal to Php18,000,000
) Condonation of accrued interest
) Extension of maturity date to December 31, 2018
) Reduction of interest rate to 8%, payable annually on December 31.
Carrying value (20 M + 2M) 22,000,000
Present value of future cash inflows:
Principal due on 12/31/16 (18M x 0.8264) P14,875,200
Interest for 2 years
18M x 8% = 1,440,000; 1,440,000 x 1.7355 2,499,120 17,374,320
Impairment loss P 4,625,680 Entry:
Restructured Notes Receivable 17,374,320
Impairment Loss – Receivables 4,625,680
Notes Receivable 20,000,000
Interest Receivable 2,000,000

Alternative 2
 ) Condonation of accrued interest
) Principal amount of Php4,000,000 plus interest on the unpaid principal reduced to 8%, payable in
annual instalments to begin December 31, 2017.
Carrying value (20 M + 2M) 22,000,000
Present value of future cash inflows:
4M + (8% x 20M) = 5,600,000 x 0.9091 5,090,960
4M + (8% x 16M) = 5,280,000 x 0.8264 4,363,392
4M + (8% x 12M) = 4,960,000 x 0.7513 3,726,448
4M + (8% x 8M) = 4,640,000 x 0.6830 3,169,120
4M + (8% x 4M) = 4,320,000 x 0.6209 2,682,288 19,032,208
Impairment loss 2,967,792
Entry: Restructured Notes Receivable 19,032,208
Impairment Loss – Receivables 2,967,792
Notes Receivable 20,000,000
Interest Receivable 2,000,000

Alternative 3
) Payment of the accrued interest on the date of restructuring (December 31, 2016)
) Extension of maturity date of the loan to December 31, 2018, with interest during extended term
at 7% payable on December 31, 2017 and 2018.
Carrying value 20,000,000
Present value of future cash inflows:
Principal due on 12/31/16
20M x 0.8264 16,528,000
Interest due on 12/31/15 and 12/31/16
20M x 7% = 1,400,000; 1,400,000 x 1.7355 2,429,700 18,957,700
Impairment loss 1,042,300
Entry: Restructured Notes Receivable 18,957,700
Impairment Loss – Receivables 1,042,300
Notes Receivable 20,000,000
Cash 1,400,000
Interest Receivable 1,400,000

Alternative 4
) Extension of maturity date to December 31, 2018
) Interest at 10% on the carrying value of the loan (Php22,000,000) payable December 31, 2017 and
December 31, 2018.
Carrying value 22,000,000
Present value of future cash inflows:
Principal due on 12/31/16
22M x 0.8264 18,180,800
Interest due on 12/31/15 and 12/31/16
22M x 10% = 2,200,000;
22,000,000 x 1.7355 3,818,100 21,998,900
--------------
No Impairment loss 1,100
==========

due to rounding off, but it hould be zero)

No entry is required for the restructuring.

The present condition of Camil Realty indicates that it has the ability to meet the modified terms as indicated.

Problem 11 (3-23)
Pau Company received from a SMC Corporation a one-year, P1,000,000 note bearing annual interest of 8%. Five months
prior to maturity , Pau Company discounted the note at Kapuso Bank at 10%.
Required:
 1. What were the proceeds from the note discounting?
2. Give the entry for the discounting , assuming the note was discounted without
recourse.
3. Give the entry for the discounting, assuming the note was discounted with
recourse.
(a) Maturity value = 1,000,000 + (1,000,000 x .08) = 1,080,000
Proceeds = 1,080,000 – (1,080,000 x 0.10 x 5/12) = 1,035,000
(b) Interest Receivable 46,667
Interest Revenue 46,667
1,000,000 x 8% x 7/12

Cash 1,035,000
Loss on Sale of Notes Receivable 11,667
Notes Receivable 1,000,000
Interest Receivable 46,667

Problem 12 (3-26)
Mari Company finances some of its current operations by factoring its accounts receivable to Kapuso Finance Company. On
July 1, 2016, the company factored Php4,000,000 of its accounts receivable to Kapuso Finance Company. Purchase price
was 85% of the receivables factored. Kapuso Finance Company withheld 5% of the purchase price as protection against
sales returns and allowances.
Sales returns recorded by Mari Company on the factored accounts receivable totalled Php60,000; the balance of the factor’s
holdback was settled by Kapuso Finance Company on August 31, 2016.

Required:
1. What was the net cash received by Mari Company from this factored accounts?
2. Give the entries in the books of Mari Company to record the foregoing in the
Months of July and August 2016.

Accounts receivable factored P4,000,000

Purchase price 85%
Purchase price of accounts receivable factored P 3,400,000
Less amount withheld (5% x3,400,000) 170,000
Net cash received from the factored accounts P 3,230,000

(b)
Cash 3,230,000
Receivable from Factor 170,000
Loss on Factoring 600,000
Accounts Receivable 4,000,000
Sales Returns 60,000
Receivable from Factor 60,000
Cash 110,000
Receivable from Factor 110,000
(170,000-60,000 = 110,000)

Problem 13 (3-27)
Pau Company manufactures and sells beauty products to retailers. During 2016, the company completed the following
transactions related to receivables:
a. Sold goods, Php6,000,000 on account, all under the terms: 2/15,n/60. The company uses the gross method to
record accounts receivable.
b. Total cash collected from customers on account was Php4,500,000. Customers who paid Php1,764,000 paid
their accounts within the discount period.
c. Notes received in settlement of account were Php500,000.
d. Collected Php400,000 of notes receivable plus interest of Php32,000 (which includes the Php5,600 interest
receivable at December 31, 2015).
e. Notes receivable discounted with recourse were Php80,000. Proceeds from the discounting were Php82,800.
The total maturity value of the notes is Php92,000. All of theses notes matured without notice of protest.
 f. Accounts receivable assigned were Php600,000 on a loan for Php480,000. Service fees of Php36,000 were
charged by the finance company on the assignment.
g. Notes receivable of Php30,000 were overdue as of December 31, on which Php1,800 interest has accrued.
h. Accounts of Php24,000 were written off during 2016.
i. As of December 31, Php360,000 of the assigned accounts had already been collected, this amount plus
appropriate interest of Php6,000 had been remitted to the finance company.
j. As of December 31, an assessment of collectability of the receivables indicated that the allowance for
uncollectible accounts must be adjusted to a balance of Php60,000.
k. Of the remaining notes not yet due, Php6,400 interest had accrued at December 31.
The following were the balances as of December 31, 2015:
Notes receivable Php 200,000
Interest receivable 5,600
Accounts receivable 1,200,000
Allowance fro uncollectible accounts 24,000

Required:
1. Prepare entries relating to the foregoing including year-end adjustments and any reversing entries at
January 1.
1/1/12 Interest Revenue 5,600
Interest Receivable 5,600
(1) Accounts Receivable 6,000,000
Sales 6,000,000
(2) Cash 4,500,000
Sales Discounts (1,764,000/98%) x 2% 36,000
Accounts receivable 4,500,000

(3) Notes Receivable 500,000

Accounts Receivable 500,000
(4) Cash 432,000
Notes Receivable 400,000
Interest Revenue 32,000
(5) Cash 82,800
Liability on Discounted Notes 82,800
Liability on Discounted Notes 82,800
Interest expense 9,200
Notes Receivable 80,000
Interest revenue 12,000
(6) Accounts Receivable Assigned 400,000
Accounts Receivable 400,000
Cash 444,000
Finance Charges 36,000
Notes Payable 480,000
(7) Accounts Receivable 31,800
Notes Receivable 30,000
Interest Revenue 1,800
(8) Allowance for Uncollectible Accounts 24,000
Accounts Receivable 24,000
(9) Notes Payable 360,000
Interest Expense 6,000
Cash 366,000
(10) Uncollectible Accounts Expense 60,000
Allowance for Uncollectible Accounts 60,000
60,000 – (24,000 –24,000 )
(11) Interest Receivable 6,400
Interest Revenue 6,400
(b) Trade and Other Receivables include the following:
Notes Receivable P 190,000
Accounts Receivable – Unassigned ?
Accounts Receivable - Assigned ?
Interest Receivable
Allowance for Uncollectible Accounts (60,000)
Total P

Problem 14 (MC19)
The following data are given for Toyota, Inc.:
Cash Credit Total
Cost of sales Php 100,000 Php 900,000 Php 1,000,000
Cash received from
customers 130,000 1,170,000 1,300,000
Assuming merchandise was marked to sell as follows: Cash sales, at 30% above cost and credit sales, at 40% above cost, all
of which are collectible. The balance of accounts receivable at the end of the period was _____________. Php90,000
900,000 x 1.4 = 1,260,000; 1,260,000 – 1,170,000 = 90,000

Problem 15 (MC 22)

Camil Company had the following information relating to its accounts receivable:
Accounts receivable at 12/31/15 Php 2,600,000
Credit sales for 2016 10,800,000
Collection from customers during 2016 (including
recovery of Php50,000) 9,500,000
Accounts written off 9/30/16 250,000
Collection of accounts written off in prior years 50,000
Estimated uncollectible receivables per aging
at 12/31/16 330,000

At December 31, 2016, Camil’s accounts receivable before allowance for uncollectible accounts, should be ____________.
Php3,700,000
2,600,000 + 10,800,000 + 50,000 – 9,500,000 – 250,000 = 3,700,000
Problem 16 (MC27)
Camil Company prepared an aging of its accounts receivables at December 2016 and determined that the amortized cost of
the receivables was Php500,000. Additional information is available as follows:
Allowance for bad debts, 1/1/16-credit balance Php 56,000
Accounts written off as uncollectible during 2016 46,000
Accounts receivable at 12/31/16 540,000
Uncollectible accounts recovery during 2016 10,000
What is Camil’s uncollectible account expense for the year 2016? Php20,000
540,000 – 500,000 = 40,000; 40,000 + 46,000 – 56,000 – 10,000 = 20,000

Problem 17 (MC25&26)
The following accounts were abstracted from Pau Company’s unadjusted trial balance at December 31, 2016:
Debit Credit
Accounts receivable Php 2,000,000
Allowance for uncollectible
accounts 16,000
Net credit sales Php 6,000,000
Pau Company estimates that 3% of the gross accounts receivable outstanding will become uncollectible.
1. After adjustments at December 31, 2016, what is the balance of the allowance for uncollectible accounts? Php60,000
3% x 2,000,000 = 60,000
2. How much uncollectible accounts expense is reported in Pau Company’s statement of comprehensive income for
year ended December 31, 2016? Php76,000
60,000 + 16,000 = 76,000