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2) An analysis and aging of accounts receivable of the Lucille Company at December 31, 2005, showed the
following:
Accounts Receivable .................................. $840,000
Allowance for Doubtful Accounts
(before adjustment) ................................ 36,000 (cr)
Accounts estimated to be uncollectible ............... 76,800
Compute the net realizable value of the accounts receivable of Lucille Company at December 31, 2005.
a. $804,000
b. $799,200
c. $763,200
d. $727,200
3) An analysis and aging of the accounts receivable of Shriner Company at December 31 revealed the
following data:
Accounts Receivable .................................. $450,000
Allowance for Doubtful Accounts (before adjustment) .. 25,000 (cr)
Accounts estimated to be uncollectible ............... 32,000
4) Maple Company provides for doubtful accounts expense at the rate of 3 percent of credit sales. The
following data are available for last year:
Allowance for Doubtful Accounts, January 1 ........ $ 54,000 (cr)
Accounts written off as uncollectible during the
year ............................................ 60,000
Collection of accounts written off in prior years .
(customer credit was re-established) .............. 15,000
Credit sales, year-ended December 31 .............. 3,000,000
The allowance for doubtful accounts balance at December 31, after adjusting entries, should be
a. $45,000.
b. $84,000.
c. $90,000.
d. $99,000.
5) The following information is from the records of Prosser, Inc. for the year ended December 31, 2005.
If the basis for estimating bad debts is 1 percent of net sales, the correct amount of doubtful accounts
expense for 2005 is
a. $22,800.
b. $23,200.
c. $28,880.
d. $34,880.
6) Based on the aging of its accounts receivable at December 31, Pribob Company determined that the net
realizable value of the receivables at that date is $760,000. Additional information is as follows:
Pribob's doubtful accounts expense for the year ended December (31 is
a. $80,000.
b. $96,000.
c. $120,000.
d. $160,000.
7) Richards Company uses the allowance method of accounting for bad debts. The following summary
schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current
year.
8) Richards Company uses the allowance method of accounting for bad debts. The following summary
schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current
year.
If Richards determines bad debt expense using 1.5 percent of net credit sales, the net realizable value of
accounts receivable on the December 31 balance sheet will be
a. $738,000.
b. $740,000.
c. $742,000.
d. $750,000.
9) Gekko, Inc. reported the following balances (after adjustment) at the end of 2005 and 2004.
12/31/2005 12/31/2004
Total accounts receivable ................. $105,000 $96,000
Net accounts receivable ................... 102,000 94,500
During 2005, Gekko wrote off customer accounts totaling $3,200 and collected $800 on accounts written
off in previous years. Gekko's doubtful accounts expense for the year ending December 31, 2005 is
a. $1,500.
b. $2,400.
c. $3,000.
d. $3,900.
10) When a specific customer's account is written off by a company using the allowance method, the effect on
net income and the net realizable value of the accounts receivable is
PROBLEM:
On January 1, 2018, Shrek Co. sold an office equipment with a cost of P1,000,000 and
accumulated depreciation of P150,000 in exchange for a 3-year, 10% P2,000,000 note
receivable. Principal is due on December 31, 2020 but interest is due annually every July 1 and
December 31. The prevailing interest rate for this type of note is 12%.
11) How much is the gain or loss on sale of office equipment in 2018?
a. P 1,901,730
b. P 1,051,730
c. P 901,730
d. P 1,053,960
13) How much is the carrying amount of the note on December 31, 2018?
a. P 1,915,834
b. P 1,930,784
c. P 2,000,000
d. P 1,963,395
14) How much is the current portion of the note on December 31, 2018?
a. P 14,950
b. P 1,963,395
c. P 1,930,784
d. None of the above
15) How much is the non-current portion of the note on December 31, 2018?
a. P 14,950
b. P 1,963,395
c. P 1,930,784
d. None of the above