Accounts Receivable
Accounts Receivable
Accounts Receivable
1. B
2. D
3. A
4.
5.
ACCOUNTS RECEIVABLE
1. When examining the accounts of Groot Company, it is ascertained that balances relating to both
receivables and payables are included in a single controlling account called “receivables control”
with a debit balance of P4,850,000. An analysis of the make-up of this account revealed the
following:
Debit Credit
Accounts receivable – customers 7, 800,000
Trade accounts receivable – officers 500,000
Debit balance – creditors 300,000
Postdated checks from customers 400,000
Subscription receivable 800,000
Accounts payable for merchandise 4,500,000
Credit balances in customer’s account 200,000
Cash received in advance from customers 100,000
Expected bad debts 150,000
After further analysis of the aged accounts receivable, it is determined that the allowance for
doubtful accounts should be 200,000. What is the net realizable value of accounts receivable?
a. 8,000,000
b. 8,500,000
c. 8,300,000
d. 8,550,000
Answer B
Accounts Receivable - customers
(7,800,000 + 400,000 postdated
checks) 8,200,000
Allowance for doubtful accounts (200,000)
Trade accounts receivable - officers 500,000
Net Realizable Value 8,500,000
2. Asgard Company started business at the beginning of current year. The entity established an
allowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity wrote-
off 50,000 of uncollectible accounts. Further analysis showed that merchandise purchased
amounted to P9,000,000 and ending merchandise was P1,500,000. Goods were sold at 40% above
cost.
The total sales comprised 80% sales on account and 20% cash sales. Total collections from
customers, excluding cash sales, amounted to P6,000,000. What is the amount of sales on account?
a. 10,500,000
b. 18, 750,000
c. 12,000,000
d. 8,400,000
(Answer D)
Cost of goods Sold (9,000,000 - 1,500,000) 7,500,000
Markup on cost (40% x 7, 500,000) 3,000,000
Total Sales 10,500,000
Cash Sales (20% x 10,500,000) (2,100,000)
Sales on account 8,400,000
The entity reported accounts receivable of P1,250,000 on December 31, 2019 and P2,000,000 on
December 31, 2020. What is the allowance for doubtful accounts on December 31, 2019 & 2020?
a. 20,000 and 34,000
b. 21, 250 and 40,000
c. 22, 500 and 34,000
d. 36,000 and 21 250
2. Fluffiness Overload Company began operations on January 1, 2016. The entity provided for
doubtful accounts based on 5% of annual in prior years. On January 1, 2019, the entity changed
the method of determining the allowance for doubtful accounts using an aging schedule.