ACCOUNTANCY PROGRAM
Problem 1. For the year ended 2018, the following selected items are included the trial balance of Black Bulls
Company.
Problem 2. Provided below are the receivable accounts and basis of measurement of each account of “Asta
Company”:
Face Value Present Value Current Cost Realizable value
Short-term receivables 1,000,000 1,100,000 1,200,000 900,000
Accounts Receivable 500,000 600,000 700,000 400,000
Interest bearing long-term receivables 2,000,000 2,100,000 2,200,000 2,100,000
Non-interest-bearing long-term receivables 3,000,000 2,800,000 3,100,000 2,900,000
Problem 3. Prepare the journal entries for each transaction using the two methods in accounting doubtful
accounts expense
Transaction Allowance Method Direct Write-off Method
8. Accounts of 30,000 DAE 30,000 No entry
are considered ADA. 30,000
doubtful of collection
Problem 6. Katherine Company provided the following information for the current year:
January 1 December 31
Accounts receivable 1,200,000
Allowance for doubtful accounts 60,000
Sales 8,000,000
Cash collected from customers 7,000,000
The cash collections included recovery of P10,000 from a customer whose account had been written off as
worthless in prior year. During the year, it was necessary to recognize doubtful accounts expense of
P100,000 and write off worthless customers’ accounts of P30,000. At year-end, a customer settled an account
by issuing a 12%, six month note for P400,000.
14. What is the net realizable value of accounts receivable on December 31? 1,640,000
Problem 7. M Company provided the following accounts abstracted from the unadjusted trial balance at
year-end:
Debit Credit
Accounts Receivable 5,000,000
Allowance for doubtful accounts 40,000
Net credit sales 20,000,000
The entity estimated that 3% of the gross accounts receivable will become uncollectible.
15. What amount should be recognized as doubtful accounts expense for the current year? 190,000
Problem 8. L Company provided the following data for the current year:
The entity provided for doubtful accounts expense at the rate of 3% of net sales.
16. What is the allowance for doubtful accounts at year-end? 235,000
Problem 9. On January 1, 2015 E company reported accounts receivable P2,070,000 and allowance for
doubtful accounts P80,000. The entity provided the following data:
The collections from customers during the year totaled P14,000,000 excluding recoveries.
Doubtful accounts are provided for as a percentage of credit sales. The entity calculated the percentage
annually by using the experience of the three years prior to current year.
17. What is the net realizable value of accounts receivable on December 31, 2015? 2,650,000
18. What amount should be reported as doubtful accounts expense for 2015? 300,000
19. What amount should be reported as allowance for doubtful accounts on December 31, 2015? 110,000
Problem 10. Kriz Company is a leading educational institution with student population of more than 50,000.
Kriz continuously maintains good quality education and a roster of qualified instructors. As a result, Kriz
continuously produces top graduates in several fields. As of December 31, 2010, Kriz has an outstanding
receivable balance of P23,250,000 broken down into: 0-60 days outstanding, P9,000,000; 61-120 days
outstanding, P6,750,000; and over 120 days outstanding, P7,500,000. Estimated percent uncollectible of these
accounts is 2%, 4% and 10%, respectively. Kriz wrote off P525,000 of its receivables and recovered P300,000
from accounts previously written off in prior year. As of December 31, 2009, Kriz has an allowance for
uncollectible accounts of P650,000.
20. Base on the aging analysis, Kriz should report an allowance for doubtful accounts as of December 31,
2010at : 1,200,000
Problem 11. Global Bank Granted a loan to a borrower on January 1, 2015. The interest on the loan is 12%
payable annually starting December 31, 2015. The loan matures in three years on December 31, 2017. The other
data related to the loan are:
Principal amount 5,000,000
Origination fees received from borrower 492,565
Direct Origination Costs incurred 150,000
Indirect Origination costs incurred 50,000
After considering the origination fee received from the borrower and the direct origination cost, the effective
interest rate is determined to be 15%.
21. What is the carrying amount of the loan receivable on January 1, 2015? 4,657,435
22. What is the carrying amount of the loan receivable on December 31, 2015? 4,756,050
23. What is the interest income for 2016? 713,408
Problem 12. B Bank loaned B Company 7,500,000 on January 1, 2013. The terms of the loan were payment in
full on January 1, 2017 plus annual interest payment at 11%. The interest payment was made as scheduled on
January 1, 2014. However due to financial setbacks, B Company was unable to make the 2015 interest
payment. B bank considered the loan impaired and projected the cash flows from the loan on December 31,
2015. The bank accrued the interest on December 31, 2014, but did not continue to accrue interest for 2015 due
to impairment of the loan. The projected cash flows are:
Date of cash flow Amount projected on December 31, 2015
December 31, 2016 500,000
December 31,2017 1,000,000
December 31, 2018 2,000,000
December 31, 2019 4,000,000
Round the present values in two decimal places.
24. Prepare the journal entry for the impairment of the loan on January 2015.
Impairment loss 2,965,000
Accrued interest receivable 825,000
Allowance for loan impairment 2,140,000
25. Prepare the necessary journal entries on December 31, 2016?
Cash 500,000
Loan Receivable 500,000
Allowance for loan impairment 589,600
Interest Income 589,600
26. What is the carrying amount of the loan receivable on December 31,2017? 5,049,056
Cash 1,000,000
Loan Receivable 1,000,000
Problem 13. On December 31, 2015, Jet Company received two P1,000,000 notes receivable from customers in
exchange for services rendered. On both notes, interest is calculated on the outstanding principal balance at
the annual rate of 3% and payable at maturity.
The note from Maxx Company, made under customary trade terms, is due in nine months and note from Hart
Company is due in five years.
The market interest rate for similar notes on December 31, 2015 was 8%. The compound interest factors to
convert future value into present value at 8% follow:
Present value of 1 due in nine months .944
Present value of 1 due in five years .680
28. What is the carrying amount of notes receivable from Hart Company on December 31, 2015? 782,000
29. What is the carrying amount of notes receivable from Maxx Company on December 31, 2015? 1,000,000
Problem 15. On December 1, 2015, B company assigned specific accounts receivable totaling P4,000,000 as
collateral on a P3,000,000, 12% note form a certain bank. The entity will continue to collect the assigned
accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted
in advance on the P3,000,000 value of the note. The December collections of assigned accounts receivable
amounted to P2,000,000 less cash discounts of P100,000. On December 31, 2015, the entity remitted the
collections to the bank in payment for the interest accrued on December 31, 2015 and the note payable. The
entity accepted sales returns of P150,000 on the assigned accounts and wrote off assigned accounts of P200,000.
33. What is the balance of accounts receivable-assigned on December 31, 2015? 1,650,000
34. What amount should be disclosed as the equity of Bamboo Company in assigned accounts on December ,
2015? 520,000
Problem 16. Zues Company factored P5,000,000 of accounts receivable to a finance entity at the end of current
year. Control was surrendered by Zeus Company. The factor assessed a fee of 5% and retained a holdback
equal to 7% of the accounts receivable.
In addition, the factor charged 10% interest computed on a weighted average time to maturity of the accounts
receivable of 54 days.
36. If all accounts are collected, what is the cost of factoring the accounts receivable? 323,973
Problem 17. On June 30, 2015, Ray Company discounted at the bank a customer P6,000,000, 6-month, 10%
note receivable dated April 30, 2015. The bank discounted the note at 12% without recourse.
37. What is the amount received from the note receivable discounting? 6,048,000
Problem 18. Rand Company accepted from a customer a P4,000,000, 90-day, 12% interest-bearing note dated
August 31, 2015. On September 30, 2015, the entity discounted the note with recourse at the Apex State Bank
at 15%. The discounting with recourse is accounted for as secured borrowing.
39. What is the amount received from the discounting of note receivable? 4,017,000