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Chapter 4 - Accounts Receivable

Trade receivables total P146,000, comprising accounts receivable of P150,000 less the allowance for uncollectibles of P4,000. Non-trade receivables total P1,554,000, including notes receivable, tax refund claims, advances, dividends receivable, and deposits. Current receivables total P1,300,000 while non-current receivables are P400,000, consisting of the notes receivable and advances to officers.

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966 views

Chapter 4 - Accounts Receivable

Trade receivables total P146,000, comprising accounts receivable of P150,000 less the allowance for uncollectibles of P4,000. Non-trade receivables total P1,554,000, including notes receivable, tax refund claims, advances, dividends receivable, and deposits. Current receivables total P1,300,000 while non-current receivables are P400,000, consisting of the notes receivable and advances to officers.

Uploaded by

Jerome_Jade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Trade and Non-trade receivables

1. The record of Wee Co. on December 30, 20x1 show the following:
Accounts receivable, net of P15,000 credit balance in customer accounts P158,000
Allowance for uncollectible accounts (8,000)
Notes receivable (non-trade) – due on December 31, 20x5 180,000
Claim for tax refund (approved by BIR and due on demand) 12,000
Advances to affiliates (payment due date not yet agreed upon) 900,000
Advances to officers (due in 6 months) 180,000
Dividend receivable 220,000
Selling price of unsold goods sent out on consignment at 140% of cost 28,000
Security deposit on a long-term lease 30,000
Total P1,700,000

Requirement: Compute for the correct amount of total receivables with sub-classifications for the following:
trade receivables, non-trade receivables, current receivable and non-current receivables.

Recognition of Trade Receivables

2. On December 27, 20x1, Bye-bye Duck Co. received a sales order for a credit sale of goods with selling price of
P1,600. The goods were shipped by Bye-bye Duck Co. on December 31, 20x1 and were received by the buyer
on January 2, 20x2. The related shipping costs amounted to P50. Bye-bye Duck Co. collected the receivable
on January 5, 20x2.

Requirement: Provide the entries under each the following shipping terms: (a) FOB shipping point, freight
collect; (b) FOB destination, freight prepaid; (c ) FOB shipping point, freight prepaid; and (d) FOB destination,
freight collect.

Trade and Cash Discounts

3. Farmer Dell Co. sold goods with a list price of P100,000 on credit term of 10%, 3/10, n/45.

Requirement (a): Traditional GAAP

Provide the journal entries under the (1) Gross Method and (2) Net Method, respectively. Use the following
assumptions: the consideration is collected:
a. Within the discount period; and
b. Beyond the discount period.

Requirement (b): PFRS 15

Additional information: In accordance with PFRS 15, Farmer Deli Co. estimates that 80% of the available cash
discount will be taken by the customer. Provide the journal entries. Assume (1) Farmer Dell Co. does not use
a sales discount account; and (2) Farmer Dell Co. uses a sale discount account. Assume further that the estimate
coincides with actual result.

Accounting for bad debts

4. The balances of Boom Co.’s accounts receivable and allowance for bad debts at the beginning of the period were
P120,000 and P9,000, respectively. The following transactions occurred during the period:
a. Sales on account, P250,000.
b. Collections of sales on account, P220,000.
c. The collectability of P30,000 accounts receivable was found to be doubtful.
d. P15,000 accounts receivable were deemed worthless.
e. P8,000 previously written off accounts receivable was subsequently collected (not included in the collections
above).

Requirements:
a. Prepare the journal entries (use the “allowance method”).
b. Determine the ending balances of accounts receivable and allowance for bad debts using T-accounts.
c. Determine the carrying amount of the accounts receivable at year-end.

Estimating doubtful accounts


5. The records of Ship Co. show the following information:
Accounts receivable, January 1 P180,000
Allowance for bad debts, January 1 (Credit) 12,600
Sales on account 900,000
Sales returns on credit sales 90,000
Write-offs 15,800
Recoveries 2,600
Collections, excluding recoveries 781,000

Requirements: Compute for the (1) bad debts expense, (2) ending balance of allowance for bad debts, and
(3) carrying amount of accounts receivable on December 31 under each of the following scenarios:
a. Percentage of net credit sales (2%)
b. Percentage of ending receivable (8%)

6. The following pertains to Lakland Co.’s accounts receivable:


Days outstanding Amount % uncollectible
0-60 P190,000 1%
61-90 240,000 3%
91-120 30,000 7%
Over 120 10,000 10%
Total P470,000

The allowance for bad debts account has a beginning balance of P10,100. Lakland wrote-off P4,600 accounts
and recovered P200 accounts during the period.

Requirements: Compute for the (1) bad debts expense, (2) ending balance of allowance for bad debts, and
(3) ending carrying amount of accounts receivable.

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