teenth. ree _ CHAPTER 16 | ACCOUNTS RECEIVABLE Problem 16-1 (AICPA Adapted) me Company provided the following information for the current Accounts receivable on Ji Credit sales Petia naa Collections from customers, excluding recovery 4,750,000 Accounts written off 125,000 Collection of accounts written off in prior year (customer credit was not reestablished) 25,000 Estimated uncollectible receivables per aging e of receivables at December 31 165,000 What is the balance of accounts receivable, before allowance for _ doubtful accounts onDecember31? "eR a by a. 1,825,000 b. 1,850,000 c. d. . 1,950,000 |. 1,990,000 Solution 16-1 Answer a Accounts receivable - January 1,300,000 Add: Credit sales 5,400,000 Total 6,700,000 Less: Collection from customers "4,750,000 Accounts written off ~ 125,000 4,875,000 Accounts receivable - December 31 1,825,000 The recovery of accounts written off does not affect the balance of accounts receivable because the effect is offsetting. 205a Problem 16-2 (AICPA Adapted) year: Jey Company provided the following data forthe curent 650,000 Accounts receivable, January 1 2,700,000 Credit sales 75,000 Sales returns 40,000 Accounts written off, 2,150,000 Collections from customers 50000 Estimated future sales returns at.December 31 110,000 Estimated uncollectible accounts at 12/31 per agi08 ber 312 ‘Whats the amortized cost of accounts receivable on Decem 1,200,000 b. 1,125,000 c. 1,085,000 4. 925,000 Solution 16-2 Answer d 650,000 ‘Accounts receivable ~ January! 2,700,000 Credit sales 3,350,000 Total Less: Collections from customers 2 Accounts written off Bam 2.265.000 Sales returns rsoot ‘Accounts receivable ~ December 31 LZ 1,085,000 ‘Accounts receivable ‘ieaoo Less: Allowance for doubtful accounts NW 160,000 Allowance for sales returns ee ‘Net realizable value = a is the net The amortized cost of accounts receivable is the same asthe ‘realizable vale. 206 ; F t | \ CPA Adaneg j !) Bok Company "Pere he loving inomaton yearn Trade 80unts ressvahy Aine rat ft uncllestibieaceqg ‘ Sencterarese ey tin Nov Selling rice of unsold pes, 30,000 Miami on consignnten ‘ot included in Mines 130% of cost and iami’s, used for storing some inventories 300,000 Total 1,500,000 ‘What total amount, ‘ould be reported as trade and other receivables under current assets at year ery a 940,000 b. 1,200,000 c. 1,240,000 4. 1,500,000 Solution 16-3 Answer q Trade accounts receivable 930,000 Allowance for uncoltectible accounts . € 20,000) Claim receivable # 30,000 Total trade and other receivables 340,000 The selling price of goods ‘on consignment is excluded from accounts receivable because the goods are still unsold. The cost of the consis igned goods of P200,000 (260,000 / 130%) should be included in’ inventory. ‘The security depositis a noncurrent receivable. 207 :i eee cree cee Problem 16-4 (AICPA Adapted) Scene Faith Company provided the following information relating operations: 4,000,000, ‘Accounts receivable, January 1 (5,400,000) Accounts receivable collested (2,000,000) Cash sales 4,800,000, Inventory, January 1 (4 400,000 Inventory, December 31 8,000,000 Purchases 200,000 Gross margin on sales 317 8,200,000 b. 6,200,000 © 2,000,000 4. 4,200,000 Solution 16-4 Answer b 000 Inventory ~ January on Purchases 000.000 : 00 Goods available for sale 128000 Inventory — December 31 (4400,000) Cost of goods sold 3,400,000" Gross margin on sales 4.200.000 Gross sales 12,600,000 Cash sales 2,000,000) Credit sales 10,600,000 Accounts receivable — January 1 4,000,000 Total 14,600,000 Accounts receivable collected (8,400,000) Accounts receivable ~ December 31 820,000 208 fuses ‘What amount should be reported as accounts receivable on December re en problem 16-5 (AICP, Adapted) Steven Company provid, see yearof operations: *“Ollowing information during the fist Total mershandite purchases forthe year Merchandise inventory gr (aay — ¢7.000,600 Colestions rom eur eRe 31 “tatason December 31? ‘a.* 1,000,000 b. 3,840,000 ¢. 5,000,000 4. 5,800,000 Solution 16-5 Answer b Purchases Inventory - December 31 Cost of goods sold ‘Markup on cost (40% x 5,600,000) Sales (140% x 5,600,000) 7,840,000 Collections from customers (4,000,000) ‘Accounts receivable - December 3] 3,840,000 Sales ratio (100% + 40%) 140% 209be OO Problem 16-6 (LAA) pod of ecsounting fr ch oe the net price m 26,2021, the entity Ae Comm teen ha ee Sold merchandise witha ist price of P5000, ean vee, Was given a trade discount of 20% 10%: rei 4/10, 130. : : son freightcollect. Total freight The gods wee shiped FOR desiration Ri er 77, 2001, charge paid by the customer was P100,000. ty billed at 500,000, the customer retuned damaged goods original junts receivable on December ‘What is the net realizable vale of te accounts ; 31, 20217 y 3,420,000 | . 2'920,000 . 2,703,000 4. 2/803:200 Solution 16-6 Answer c 0,000 Traeaoum 2x5 0040) (100.06 rade discount (20% x 5,000 ame Trade discount (10% x 4,000,000) (400,000) 3,600,000 Trade discount (5% x 3,600,000) (180,000) livoice price at gross i oe Sales return at gross (500,000) i 2,920,000 ‘Gross amount of accounts receivable ” Cash discount (4% 2,920,000) 116,800) A iv :t 2,803,200 Freightchange able at net amount 100,000) Net realizable value 2.103.200 FOB destination means that the sellers responsible forthe freight charge. Freight collec meansthe common carer will collect the freight charge ffomthe buyer tobe deducted fom th accounts receivable upon remitance or payment from the buyer. 210 problem 16-7 (AICPA pag 'pted) June 1, 2021, Pin £000,000 to Burrog ace Sold merchandise with alist price of nd 20%. "unt. it allowed trade discounts of 30% nJune 11,2021, the customer pain Creditterms were 210,39, Pe pelt F200.(O0 ofc es aa FOB chiping prin, ‘What amount should be ! Teported ‘a. 5,000,000 ‘as sales revenue? bi. 2800000 - Sty Fence ¢. 3,500,000 © d. 2,500,000 2 ‘What amount was received by Pit from Burras remittance in full? a. 2,744,000 b. 2,940,000 c. 2,944,000 ~ d. 3,140,000 Solution 16-7 Question I Answer 5 Question 2 Answer e List price 5,000,000 ‘Trade discounts: 30% x 5,000,000 1,500,000) 3,500,000 20% x 3,500,000 700,000) Invoice price at gross ~ sales revenue 2,800.000 Cash discount (2% x2,800,000) (56,000) Net amount 2,744,000 ‘Add: Reimbursement of delivery cost 200,000 Total remittance from Burr 2,944,000 Note thatthe customer paid the accountin full within the discount period. FOB shipping point means the buyer is responsible forthe freight charge. Freight prepaid means the seller prepaid the freight charge as an accommodation to be charged against the buyer upon full emittance. 210 SE Problem 16-8 (PHILCPA Adapted) Honduras Company revealed a balance ofP8200,000in he receivable control account at year-end, ‘Analysis ofthe accounts receivable showed the folOWite: Accounts known to be worthless Advance payments to creditors on purchase orders Advances to affiliatedentities Vs cok Customers’ accounts reporting credit balances arising from sales returns Interest receivable on bonds Trade accounts receivable — ‘unassigned ‘Subscription receivable due in 30. ‘days ‘Trade accounts receivable — assigned (Finance ‘Company's equity in assigned accounts is P500,000) ‘Trade installments receivable due | - 18 months, including uneamed finance charge of P50,000 ‘Trade accounts receivable from officers, due currently ‘Trade accounts on which postdated checks are held ‘and no entries were made on geceipt of checks Total 100,000 1,000,000 600,000) 400,000 2,000,000 2,200,000 1,500,000 850,000 150,000 mann ‘so0an0 civable at ‘What amount should be reported as trade accounts receivable year-end? ce. 4,150,000 d. 4,050,000 Solution 16-8 Answer a | Accounts receivable — unassigned Accounts receivable — assigned ‘Trade installments receivable (850,000 - 50,000) Trade accounts receivable from officers ‘Accounts on which postdated checks are held Total trade accounts receivable 22 fa ae Es 2,000,000 1,500,000 100,000 150,000 200,000 a eee | Problem 16-9 (AICPA Adapted) When examining the accounts of Bute Company, it ascertained that area eng 0 both receivables and pryablesee ee ea contro!” witha debit balance -up of this account revealed 9 Debit Credit ‘Aczounts receivable ~ customers Trade accounts receivable — officers "Sgg'v00 Debit balances - creditors 300,000 Postdated checks from customers 400,000 Subscriptions receivable 806,000 ‘Accounts payable for merchandise 4,500,000” Credit balances in customers’ aeseunts 200,000 Cash received in advance from customers 100,000 Expected bad debts 150,000 ‘After further analysis ofthe aged accounts receivable, its determined that the allowance for doubtful accounts should be P200,000, 1. Whatis the net realizable value of accounts receivable? a. 8,000,000 - b. 8,500,000 ©. 8,300,000 . 8'550,000 2. Whatamount should be reported as accounts payable? a. 4,200,000 b. 4,700,000 c. 4,500,000 4. 4,800,000. Solution 16-9 Question 1 Answer b Question 2 Answer c ‘Accounts receivable ~ customers (7,800,000 + 400,000 postdated checks) 8,200,000 Allowance for doubtful accounts ( 200,000) ‘Trade accounts receivable-officers 500,000 Net realizable value Accounts payable n3oo i Problem 16-10 (IAA) ar ‘Von Company provider the fellowing data forthe current year tosccounts receivable: Debits 5 000 January | balance after deduetng credit balance of P3000, $3009 ‘Charge sales 50,000 Charge for goods out on consignment 2,000 Shareholders subscription 4000 Accounts written off but recovered 000 25; Cash paid to customer for January | credit balance ‘000 5 5 Goods shipped to cover January | eredit balance $00,000 Deposit on long-term contract, 400,000, Claim against common carrier ‘4 300,000. Advances to ‘supplier 44 Credits Collections from customers, including overpayment 000 ‘of PS0,000 5738 00 Writeoft 25,000 Merchandise returns 15,000 Allowances to customers for shipping damages 50,000 Collectiononcarrierclaim | 200,000 Collection on subscription * ivable on 1, What amount should be reported as accounts receive’ December 317 x a. $65,000 b. 595%000 tS d. 495; 2. Whattotal amount of rae and other receivables shouldbe reported under current assets? a. 1,745,000 b. 2/045%000 ‘ 1188 4 3. What total amount of other receivables should be reported under moncurrent assets? a. 1,650,000 i b. 15,150,000 ¢. 1,300,000 4. {600,000 214 Solution 16-10 Question I Answer b ‘Accounts receivable ~ January | Charge sales ‘ ‘Accounts written off but recovered Total Collections from customers writeoft Merchandise retums “ Allowance to customers for shipping damages ‘Accounts receivable ~ December 31 ‘Accounts receivable ~ January | Credit balance of customer Adjusted accounts receivable Collections from customers ‘Overpayment Adjusted collections Question 2. Answer ¢ i Accounls receivable Claim reeeivable’ (400,000 - 50,000) ‘Advances to supplier Total trade and other receivables Question 3 Answer ¢ Subscriptions receivable (1,006,000 -200,000) Deposit on contract Total long-term other receivables 25 560,000, 5,250,000 10,000 5,820,000 (5,150,000) (35,000) (25,000) 15,000) 595,000 530,000 800,000 500,000 1,300,000CE Problem 16-11 (IAA) sons affecting ‘Wonder Company provided the following transactions ‘ecounts receivable during the current year: Sales — cash and credit 1 Cash received from credit customers, all of whom 100k advantage of the discount feature of the credit terms 4/10,1/30 ash received from cash customers Accounts receivable written off as worthless Credit memorandum issued to credit customers for sales returns and allowances Cash refunds given to cash customers for sales returns and allowances , Recoveries on accounts receivable written off as “uncollectible in prior periods not included in cash received from customers stated above Balances on January 1 Accounts receivable Allowance for doubtful accounts The entity provided for doubtful account expense 5,900,000 950,000 100,000 by crediting forthe allowance for doubtful accounts in the amount of P70,000 ‘current year. jivable on 1. What amount should be reported as accounts receival December 31? ‘a. 1,300,000 b. 1,426,000 c. 1,280,000 d. 1,220,000 2, Whatamount should be reportedas allowance for doubtful accounts on December 31? a. 120,000 b. 200,000 ©. 250,000 d. 170,000 Solution 16-11 Question J Answer a ‘Accounts receivable — Credit sales Total Cash received from ere, Sales discounts ‘Accounts receivable written off Sales returns and allowances ‘Accounts receivable ~ December 31 January 1 dit customers Total sales Cash received from cash customers — cash sales Credit sales Gross accounts receival (3,024,000 /96%) Sales discounts (4% x 3,150,000) ble collected Cash received from credit customers Gross amount Cash discount (4/10 or 4% within 10 days) Net amount Question 2 Answer Allowance for doubtful accounts - January | Recovery of accounts written off Doubtful accounts expense for current year Total . Accounts written off Allowance for doubtful accounts - December 31 27 100,000 80,000 70.06 250,000 (50,000) 200,000 k |CO E:’~CQ—Olnhh OOOO Problem 16-12 (PHILCPA Adapted) year. ‘Fermany Company started business tthe beginning fa ay ‘The entity established an allowance for doubtful accounts 750,000 of 5% of credit sales. During the year, the entity wrote Of ‘uncollectible accounts. to Further analysis showed that merchandise purchased in 9,000,000 and ending merchandise inventory wasPI,S00! were sold 40% above cost. sales. The total sales comprised 80% sales on account and 20% 25h spouted 10, Total collections fom customers, excluding cashsales 6,000,000, 1. What amount should be reported as cost of goods 014? a. 7,500,000 b. 5,400,000 c. 3,600,000 4. 6,900,000 2. What amount should be reported as sales on account? 10,500,000 18,750,000 12,000,000 8,400,000 pose i it 3. What is the net realizable value of accounts receivable at year-end? 1,980,000 ». 2,350,000 1,930,000 |. 2,400,000 pees 218 Solution 16-12 Question | Answer a Goods available for sale Ending inventory Cost of goods sold Question 2 Answer d Cost of goods sold Markup on cost” (40% x 7,500,000) Total sales Cash sales (20% x 10,500,000) Sales on account Question 3 Answer a Sales on account Collections Accounts written off ‘Accounts receivable ~ December 31 Provision for doubtful accounts (8,400,000 x 5%) Accounts written off Allowance for doubtful accounts ~ December 31 ‘Accounts receivable Allowance for doubtful accounts Net realizable value 219 7,500,000 3,000,000 10,500,000. > ( 2,100,000) 8,400,000 8,400,000 (6,000,000) 420,000 ( _$0,000) 370,000 2,350,000 (370,000) 1,980,000