ASSIGNMENT: ACCOUNTS RECEIVABLES

1. On May 1, 2016, Kelly Company sold to Bryer Company merchandise having a list price of
12,000,000 on account. Kelly Company allowed trade discounts of 20%; 10% and 10%.
Terms were 8/10; n/30, FOB shipping point. Kelly Company engages On-Time Company to
deliver the goods. On-Time Company however, requires that all shipments be paid in advance,
so Kelly Company prepaid the freight charges amounting to P130,000.
On May 3, 2016, Bryer Company notified Kelly Company that merchandise with a selling
price of P800,000 contained flaws that rendered it worthless. Subsequently, Kelly Company
issued a credit memo covering the worthless merchandise.
On May 11, 2016 Kelly company received a check for the balance due from Bryer Company.
A. Prepare the all the related journal entries to record the above-mentioned transactions under
the following methods of recording the sale:
a. Gross method; b. Net (of cash discounts) method

B. Assuming that the receivables were collected on May 12, 2016 (instead of May 11, 2016)
prepare the journal entries under the following methods of recording the sale
a. Gross method; b. Net (of cash discounts) method

2. The following information from Kline Company’s first year of operations:

 Collections from customers, P3,500,000
 Payment for merchandise purchased during the year, P4,600,000
 Ending merchandise inventory, P600,000
 Accounts payable ending balance, P1,200,000
 All sales are on account and goods are sold at a profit rate of 30%
The correct balance of accounts receivable is

3. The following information is available for Pam Company relating to 2016 operations:
Accounts receivable, January 1; P4,000,000; Accounts receivable collected, P6,300,000; Cash
sales P1,900,000; Inventory, January 1; P3,200,000; Inventory, December 31, P1,900,000;
Purchases P5,950,000; Gross margin on sales P2,450,000
The balance of the accounts receivable on December 31, 2016 is

4. On December 31, 2016 the accounts receivable control account of Belle Company had a
balance of P6,150,000. An analysis of the accounts receivable account showed the following:
Accounts deemed to be worthless P75,000
Advance payments to creditors on purchase orders 300,000
Advances to affiliated companies 750,000
Customer’s credit balance arising from sales return (450,000)
Interest receivable on bond investment 300,000
Other trade accounts receivable – unassigned 1,500,000
Subscriptions receivable – ordinary share due to 30 days 1,650,000
Trade accounts receivable – assigned 1,125,000
Trade installation receivable due 1 – 18months,
 (including unearned finance charges, P37,500) 637,500
Trade receivables from officers, due currently 112,500
Trade accounts on which post-dated checks are held
(no entries were made on receipts of checks) 1,50,000
Total 6,150,00
The correct balanced of trade receivables on December 31, 2016 is

5. Linda Company’s accounts receivable balance at January 1, 2016 was P1,450,000 net of
allowances totaling P75,000.
During 2016, Linda Company reported sales of P5,200,000. 15% of sales in 2016 were cash
sales and the rest were on account under a 3/10, n/30 credit term. Sales returns amounted to
P80,000 for cash sales in which the customers were refunded and P95,000 for credit-sales
Total debit to cash during the period P5,740,000 which includes recoveries of previously
written-off accounts totaling P110,000. 40% of the collections from its current customers
were made within the discount period.
Receivables written-off in 2016, P90,000
The gross accounts receivable of Linda Company at December 31, 2016 is.

6. Willow Company sells products for P650,000 during the month of February 2016. During
3016 receivables collected totaled P320,000. P8,000 were written-off as uncollectible and a
P1,000 account previously written off was collected.
Prepare the journal entries necessary to record the preceding information if:
a. Bad debts are estimated at 3% b. Bad debts are recorded as they usually occur
of sales at the time of sale

7. The following were abstracted from the records of Hannah Company:

Accounts receivable, December 31, 2016 P760,000
Allowance for bad debts (before adjustment), December 31, 2016 3,500
Sales, 2016 2,500,000
Sales discounts, 2016 20,000
Sales returns, 2016 30,000

A. Determine the bad debts expense and allowance for bad debts.
Bad debts Allowance for
expense bad debts
a. Bad debts based on 0.4% of net sales
b. Bad debts based on 2.5% of outstanding
accounts receivable
c. Aging analysis of which P18,000 of the accounts
are uncollectible

B. Assuming the same foregoing data except that the following accounts before adjustment at
December 31, 2016 of P3,500 was a debit rather than a credit balance, determine the bad debts
expense and adjusted balance of the Allowance for bad debts:
 Bad debts Allowance for
expense bad debts
a. Bad debts based on 0.4% of net sales
b. Bad debts based on 2.5% of outstanding
accounts receivable
c. Aging analysis of which P18,000 of the accounts
are uncollectible

8. On December 31, 2016, before any year-end adjustments, the balances in Mack Company’s
Accounts Receivable account had a debit of P1,300,000 and the Allowance for bad debts had
a credit balance of P50,000.
The year-end balance reported in the balance sheet for the Allowance for bad debts will be
based on the aging schedule shown below
Days Outstanding Amount % of Collectability
1-30 days past due P850,000 .98
31 – 60 days past due 260,000 .95
61 – 90 days past due 100,000 .90
91 – 120 days past due 50,000 .80
Over 120 days past due 40,000 .50

Total receivables written-off during the year totaled P30,000; while total recoveries of
previously written-off accounts during the year totaled P9,000
a. The adjusted Allowance for bad debts on December 31, 2016 is;
b. The amount to be reported as bad debts expense for 2016 is

9. The following information was made available about Luke Company’s receivables:
Accounts receivable, January 1 35,000
Allowance for uncollectible accounts, January 1 35,000
Sales – all on credit 2,195,000
Sales returns and allowances 5,000
Cash collected from customers’ current accounts, net of sales 2,110,000
discounts of P5,000
Accounts written off during the year 30,000
Recoveries of accounts written off in the previous year 7,000

Actual credit sales and uncollectible accounts for the previous years:
Year Net Credit Sales Uncollectible accounts
2014 P1,100,000 32,000
2015 1,200,000 40,000
2016 1,350,000 55,750
 An aging of the receivables at December 31, 2016 indicated the following:
Age % of A/R End Probability of Collection
Current 80% 90%
31-60 days 12% 85%
61-90 days 7% 50%
Over 90 days 1% 1%

Determine the bad debts expense for 2016 and the related allowance at December 31, 2016
under
Bad debts Allowance for
expense bad debts
a. Percentage of net credit sales method
b. Aging of the receivables method

10. Presented below are a series of independent situations

a. Rose Company’s unadjusted trial balance at December 31, 2016, included the following
accounts
Dr Cr.
Allowance for bad debts P9,000
Sales P4,750,000
Sales return and allowances 125,000

Rose Company estimates its bad debts expense to be 4% of net sales.

a1) Bad debts expense for 2016
a2) Allowance for bad debts accounts at December 31, 2016

b. An analysis and aging of Levi Company’s accounts receivable at December 31, 2016,
disclosed the following:
Amounts estimated to be uncollectible P 280,000
Accounts receivable 2,250,000
Allowance for doubtful accounts 225,000
The net realizable value of Levi’s receivable at December 31, 2016.

c. Alex Company provides for bad debts based on 4% of credit sales. Data for 2016 includes:
Credit sales during 2016, P4,700,000; Allowance for bad debts 01/01/16; P95,000; Collection
of accounts written off in prior years, P33,000; Customer accounts written off as uncollectible
during 2016, P65,000
the Allowance for bad debts account at December 31, 2016 is

d. At the end of its first year of operations on December 31, 2016, Evelyn Company’s reported
the following
Accounts receivable, net of allowance for bad debts P1,200,000
Accounts written off as uncollectible during 2016 45,000
Bad debts expense for 2016 120,000
Accounts receivable balance at December 31, 2016 before subtracting the allowance for bad
debts account is
e. During 2016, Jacqui Company wrote off uncollectible accounts of P15,000, recovering
accounts of P7,000 that had been written off in 2016. The following information were made
available
December 31
2015 2016
Accounts receivable P1,010,000 P1,360,000
Net realizable value 960,000 1,265,000
After year-end adjustment, uncollectible accounts expense for 2016 is

f. The following were from Rob Company’s balance sheet

Debit Credit
Net credit sales P750,000
Allowance for bad debts P14,000
Accounts receivable 410,000
If the bad debts are computed at 2.5% of the accounts receivable, the bad debts expense to be
reported in 2016 is

g. For the year ended December 31, 2016, Carol Company estimated its allowance for
uncollectible accounts using the year-end aging of accounts receivable. The following data
were available
Allowance for uncollectible accounts, 01/01/2016 P184,000
Provisions for uncollectible accounts in 2016
(2% on sales of P5,000,000) 100,000
Uncollectible accounts written off during 2016 90,000
Estimated uncollectible accounts per aging 12/31/2016 265,000
g1) Year-end adjustment to uncollectible accounts expense
g2) The uncollectible accounts expense for 2016 after adjustment is

h. Eric Company had a P300,000 balance in Accounts Receivable, and Allowance for bad
debts on January 1 was P36,000.
Credit sales for the year was P1,700,000. Bad debts expense is estimated to be 2% of sales.
Write-offs for the year was P28,000.
The debit balance in Accounts receivable December 31 was P345,000.
The amount of cash collected from customers is

i. Justin Company records bad debts expense at 2% of all new sales. Sales for three
consecutive years and year-end allowance account balances were as follows: 2016 –
P1,500,000 and P20,000; 2016-P1,400,000 and P30,000; 2016 P1,750,000 and P40,000
The amount of the accounts written-off in 2016

j. On January 1, 2016, Jerry Company’s accounts receivable balance was P1,656,000 while
the allowance for bad debts was a credit of P62,400. The following data for to the periods
2013-2016 were as follows:
Credit sales Write-offs Recoveries
2013 8,880,000 208,000 17,6000
2014 9,800,000 236,000 29,600
 2015 11,729,000 240,000 28,800
2016 12,000,000 248,000 33,600

Doubtful accounts are provided for as a percentage of credit sales.

The accountant calculates the percentage annually by using the experience of the three years
prior to the current year.
Bad debts expense for 2016

k. Pat Company started on January 1, 2016. On December 31, 2016, Pat Company provided
for bad debts based on 1% of credit sales.
On January 1, 2015, Pat Company changed its method of determining its allowance for bad
debts by applying certain percentage to the accounts receivable aging as follows:
Days past invoice date Percent deemed to be uncollectible
0 – 30 1
31 – 90 5
91 – 180 20

Pat Company wrote off all accounts that were over 1 year old.
The following relate to the years ended December 31, 2015 and 2016.
2016 2015
Credit sales P6,000,000 P5,600,000
Collections 5,830,000 4,800,000
Accounts written off 54,000 None
Recovery of accounts previously written off 14,000 None
Days past invoice date at December 31
0 – 30 600,000 500,000
31 – 90 160,000 180,000
91 – 180 120,000 90,000
Over 180 50,000 30,000
Bad debts expense for 2016 is