UNIVERSITY OF SCIENCE & TECHNOLOGY OF SOUTHERN PHILIPPINES

COLLEGE OF SCIENCE AND MATHEMATICS

DEPARTMENT OF FOOD SCIENCE AND TECHNOLOGY
ACCOUNTING 22: BASIC ACCOUNTING

Name: VALMORES, JIMAROSE H. Section: BSFT-3M1 Score: __________

SEATWORK # 6: DOUBTFUL ACCOUNTS / BAD DEBTS

1. On June 30, 2015, the balance of Creative Software's Accounts Receivable

account in the general ledger was $8,450. The following outstanding invoices
made up the balance:

Customer Amount
Date

2/28/2015 Supply Warehouse 300.00

4/03/2015 Dewey Law Office 2,700.00
5/30/2015 Customs Designs 1,650.00
6/05/2015 Ontiveros Tax Consulting 800.00
6/22/2015 Midtown Taxi Service 3,000.00

Creative Software's policy is to write off specific customer accounts after 90 days
if aggressive collection attempts do not succeed. So far Creative has not been able
to collect on the outstanding accounts.

a. Journalize the adjustment for June 30, 2015. (3 points)

As of June 30, 2015, the invoices dated 2/28/2015, 4/03/2015, 5/30/2015, and
6/05/2015 are more than 90 days old and need to be considered uncollectible. The total
outstanding amount is $300 + $2,700 + $1,650 + $800 = $5,450

Journal Entry:

June 30, 2015

Allowance for Doubtful Accounts $5,450
Accounts Receivable $5,450
 To write-off the uncollectible account

2. Consider the following amounts as ending balances for three periods:

Period 1: Php 500,000
Period 2: Php 600,000
Period 3: Php 620,000

Determine the allowance for doubtful accounts and the total doubtful accounts
expense. Assume that the company set the Allowance at 3% of Accounts
Receivable. Journalize (12 points).

 Period 1:
 Allowance = 3% × Php 500,000 = Php 15,000
 Period 2:
 Allowance = 3% × Php 600,000 = Php 18,000
 Change in Allowance = Php 18,000 - Php 15,000 = Php 3,000
 Period 3:
 Allowance = 3% × Php 620,000 = Php 18,600
 Change in Allowance = Php 18,600 - Php 18,000 = Php 600
Journal Entry:

Date Account Debit Credit

Period 1 Bad Debt Expense Php 15,000
Allowance for Doubtful Accounts Php 15,000
Period 2 Bad Debt Expense Php 3,000
Allowance for Doubtful Accounts Php 3,000
Period 3 Bad Debt Expense Php 600
Allowance for Doubtful Accounts Php 600
To record provision for doubtful accounts