Receivables

Indicate how each of the following should be presented on the company's statement of financial
position at December 31, 2016.

a. Claims from customers for merchandise sold

b. Claims from employees representing cash advances
c. Expense receipts for advances made for freight charges for account of a
supplier
d. Claims from employees representing selling price of goods sold under normal
credit terms
e. Customers' accounts with credit balances resulting from sales returns
subsequent to full collection account
f. Claims against consignees for goods shipped to the latter, goods are still
unsold at the reporting date
g. Claims against consignees for goods shipped to the latter and already sold at
December 31.
h. Receivables arising from subscription to the company's share capital
i. Receivable arising from sale of equipment
j. Deposit on purchase of undelivered merchandise
k. Creditors' accounts with debit balances resulting from overpayment
l. Dishonored customer's note
m. Income tax refunds, approved by the BIR
n. Assigned accounts receivable
o. Customers' accounts on which postdated checks are held
p. Customers' accounts ascertained to be uncollectible
I. YAP Bank provided a 12% loan of P1,875,000 to James Corp. on January 1, 2012. The
principal of the loan was to be paid on January 1, 2017. Interest is payable annually on January
1, 2012. Due to financial setbacks, James Corp. was unable pay interest on January 1, 2014
interest payment thereby making YAP Bank consider the loan as impaired. YAP Bank has
accrued the interest on December 31, 2013 but did not accrue interest for 2014 due to
impairment.

The projected cash flows as of December 31, 2014 are:

Date of cash flow
December 31, 2015 P125,000
December 31, 2016 250,000
December 31, 2017 500,000
December 31, 2018 1,000,000

What is the loan Impairment loss to be recognized on 12/31/2014?

What is the interest income to be reported by the bank in 2015?
What amount of loan receivable should be reported by YAP Bank as of 12/31/2015?

II. On January 1, 2016, Kenneth sold a machine to Patrick, Patrick signed a non-interest bearing
note requiring payment of P90,000 annually for seven years. The first payment was made on
January 1, 2016. The prevailing rate of interest for this type of note at date of issuance was
10%.

How much should be recorded as sale?

III. On December Reliable Finance Company had a 31, 2013, the P5,000,000 note receivable
from Burgundy Company. The note bears 10% interest. The books reported accrued interest of
P500,000 on this date Because of financial distress being suffered by Burgundy Company,
Reliable Finance agreed to the restructuring and modification of the terms of its loan to follows:

- reduction of principal to P4,000,000;

- reduction of interest to 8% payable annually beginning December 31, 2014;
 - accrued interest on December 31, 2013 is condoned;
- and principal payment was reset to December 31, 2015.

The prevailing market rate of interest for similar obligations on the date of restructuring
decreased to 9% Use present value factors rounded to two decimal places

How much impairment loss should Reliable Finance Company record on December 31, 2013 as
a result of the restructuring?

What amount would the restructured notes receivable be reported at December 31, 2013?
Answers to Receivables

a. Accounts Receivable
b. Receivables from Employees (part of non-trade receivables) – current assets
c. Advances to Suppliers – Current assets or deduction from Accounts Payable to the same
supplier
d. Accounts Receivable
e. Customers’ Accounts with Credit Balances – Current Liabilities
f. Cost of merchandise must be included in inventories
g. Accounts Receivable
h. Subscriptions Receivable – current asset if collectible within 12 months; otherwise, non-
current asset or deduction from Shareholders’ Equity
i. Other Non-Trade Receivables – Current asset or non-current asset depending on terms
of payment
j. Advances to Suppliers – Current Assets
k. Suppliers’ Accounts with Debit Balances or Advances to Suppliers – Current assets
l. Accounts Receivable
m. Claims for Income Tax Refund – Current Assets
n. Accounts Receivable, amount of loan presented separately as part of liabilities
o. Accounts Receivable
p. Not recognized anymore (for write off)

I. P797,688; P156,277; P1,333,589

II. P481,977
III. P1,623,200; P3,867,800