RECEIBALE PROBLEMS CHAPTER 3

1. When examining the accounts of JUAN Co. it is ascertained that balances relating to both receivables and payables are included in the single controlling account called receivables control that has a debit balance of P4,850,000. An analysis of the make-up of this account revealed that following: DEBIT CREDIT Accounts receivable -customer P7,800,000 Accounts receivable -officers 500,000 Debit balances- creditors 300,000 Postdated checks from customer 400,000 Subscription receivable 800,000 Accounts payable for merchandise 4,500,000 Credit balance for customer accounts 200,000 cash received in advance from customers for goods not yet shipped 100,000 Expected bad debts 150,000 After further analysis of the aged accounts receivable, it is determined that the allowance for bad debts accounts should be P200,000. What amount should be reported as trade and other receivables under current asset? The following information is available for BULAGA Co. relating to 2012 operations: Accounts receivable, January 1 P4,000,000 Accounts receivable collected 8,400,000 Cash sales 2,000,000 Inventory, January 1 4,800,000 Inventory, December 31 4,400,000 Purchases 8,000,000 Gross margin on Sales 4,200,000 What is the balance of accounts receivable on December 31, 2012? The following transaction affecting the accounts receivable of JOSE took place during the year ended December 31, 2012: Cash (cash and credit) P5,900,000 Cash received from credit customers, all of whom took advantage of the discount of comoany's credit terms 4/10, n/30 3,024,000 Cash received from cash customers 2,100,000 Accounts receivable written off 50,000 Credit Memo issued to credit customers for sales return and allowances 250,000 Cash refunds given to cash customers for sales returns and allowances 20,000 Recoveries on accounts receivable written off in prior year (not included in cash amount stated above) 80,000 The following balances were taken from January, 1 2012 statement of financial position: Accounts receivable 950,000 Allowance for bad debts 100,000 The entity provided for bad debt losses by crediting allowance for bad debts in the amount of P70,000 for the current year. a. What is the balance of Accounts receivable on December 31, 2012? b. What is the balance of allowance for bad debts on December 31, 2012? WALLY reported the following balances after adjustment at the end of 2012 and 2011: 12/31/2012 12/31/2011 Accounts receivable P5,250,000 P4,800,000 Net realizable value 5,100,000 4,725,000

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During 2012, WALLY wrote off accounts totaling to P1,600,000 and collected P40,000 on accounts written off in previous years. What amount should be recognized as bad debts expense for the year ended December 31, 2012? 5. All of VGS Co. sales are made on credit basis, the following information is available for the current year: Allowance for bad debts - January 1 180,000 Sales 9,500,000 Sales return and allowances 800,000 Sales discounts 200,000 Accounts written off as bad debts 200,000 VGS provides for bad debts expense at the rate of 3% of net sales. What is the allowance for bad debts at year end? HARD Company sells directly to retail customers. On January 1, 2012 the balance of the accounts receivable was P2,070,000 while the balance of allowance was a credit of P78,000. The following data were gathered: Credit Sales Write-offs Recoveries 11,100,000 260,000 22,000 2009 12,250,000 295,000 37,000 2010 14,650,000 300,000 36,000 2011 15,000,000 310,000 42,000 2012 Bad debts are provided as percentage of credit sales. The accountant calculates the percentage annually by using the experience of three years prior to the current year. What amount should be reported as allowance for bad debts on December 31, 2102? On January 1, 2012, PANGIT MO Inc. sold land with carrying amount of P1,500,000 in exchange for 9-month, 10% not with face value of P2,000,000. The 10% rate properly reflects the time value of money for this type of note. On April 1, 2012, PANGIT discounted the note with recourse. The bank discount rate is 12%. The discounting transaction is accounted for as a secured borrowing. On October 1, 2012, the maker dishonored the note. PANGIT paid the bank the maturity value of the note plus protest fee of P10,000. On December 31, 2012, PANGIT collected the dishonored note in full plus 12% annual interest on the total amount due. a. What is the amount of proceeds received by PANGIT MO from discounting the note? b. What is the interest expense o be recognized by PANGIT MO of April 1, 2012? c. What is the amount collected by PANGIT MO from the customer on December 31, 2102? 8. On January 1, 2012, VICE GANDA sold goods to JESSICA SOHO. JESSICA signed a noninterest bearing note requiring payment of P600,000 annually for 7 years. The first payment was made on January 1, 2012. The prevailing market rate of interest for this type of note at date of issuance was 10%. a. What amount should be recorded as sales revenue in January 1, 2012? b. How much should be recorded as unearned interest income? c. Entry to record the sale on January 1, 2012?

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