ACCOUNTS

Accounts Receivable
Roxy Company provided the following information for the current year:
Accounts receivable on January 1 1,300,000
Credit sales 5,400,000
Collection from customers, excluding recovery 4,750,000
Accounts written off 125,000
Collection of accounts written off in prior year
(customer credit was not reestablished) 25,000
Estimated uncollectible receivables per aging of receivables
on December 31 165,000
What is the balance of accounts receivable, before allowance for doubtful accounts on December 31?
a. 1,825,000
b.1,850,000
c. 1,950,000
d. 1,990,000
Solution 18-1 Answer A
Accounts receivable - January 1 1,300,000
add: Credit sales 5,400,000
Total 6,700,000
Less: Collectioj from customers 4,750,000
accounts written off 125,000. 4,875,000
Accounts receivable - December 31 1,825,000
The recovery of accounts written off does not affect the balance of accounts receivable because the
effect is offsetting.
Steven Company provided the following information during the first year operations:
Total merchandise purchases for the year 7,000,000
Merchandise inventory on December 31 1,400,000
Collections from customers 4,000,000
All merchandise was marked to sell at 40% above cost. All sales are on a credit basis and all receivables
are collectible.
What amount should be reported as accounts receivable on December 31?
a. 1,000,000
b. 3,840,000
c. 5,000,000
d. 5,800,000
Solution Answer B
Purchases 7,000,000
Inventory- December 31 (1,400,000)
Cost of goods sold 5,600,000
Markup on cost (40% x 5,600,000) 2,240,000
Sales (140% x 5,600,000) 7,840,000
Collections from customers (4,000,000)
Wonder Company provided the following transactions affecting accounts receivable during the current
year:
Sales- cash and credit 5,900,000
Cash received from credit customers, all of whom
took advantage of the discount feature of the
credit terms 4/10, n/30 3,024,000
Cash received from cash customers 2,100,000

Accounts receivable written off as worthless 50,000
Credit memorandom issued to credit customers
for sales returns and allowances 250,000
Cash refunds given to customers for sales
returns and allowances 20,000
Recoveries on accounts receivable written off as
uncollectible in prior periods not included in
cash received from customer stated above 80,000
Balances on January 1
Accounts receivable 950,000
Allowance for doubtful accounts 100,000
The entity provided for uncollectible account 100,000
The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the
amount of 70,000 for the current year.
What amount should be recorded as accounts receivable on December 31?
a. 1,300,000
b. 1,426,000
c. 1,280,000
d. 1,220,000
Answer A
Accounts receivable- January 1 950,000
Credit sales 3,800,000
Total 4,750,000
Cash received from credit customers (3,024,000)
Sales discount (126,000)
Accounts receivable written off (50,000)

Sales returns and allowances (250,000)
TRADE AND OTHER RECEIVABLES
Miami Company reported the following information at year-end:
Trade accounts receivable 930,000
Allowance for uncollectible accounts (20,000)
Claim against shipper for goods lost
in transit in November 30,000
Selling price of unsold goods sent by
Miami on consignment at 130% of cost and
not included in Miami's ending inventory 260,000
Security deposit on lease of warehouse
used for storing some inventories 300,000
Total 1,500,000
What total amount should be reported as trade and other receivables under current assets at year-end?
a. 940,000
b. 1,200,000
c. 1,240,000
d. 1,500,000
Solution Answer A
Trade accounts receivable 930,000
allowance for uncollectible accounts (20,000)
Claim receivable 30,000
Total trade and other receivables 940,000
Honduras Company revealed a balance of 8,200,000 in the accounts receivable control account at year-
end.
An analysis of the accounts receivables showed the following:
Accounts known to be worthless 100,000
Advance payments to creditors on purchase orders 400,000
Advances to affiliated entities 1,000,000
Customers' accounts reporting credit balances arising
from sales returns (600,000)
Interest receivables on bonds 400,000
Trade accounts receivable - unassigned 2,000,000
Subscription receivable due in 30 days 2,200,000
Trade accounts receivable- assigned (Finance
Company's equity in assigned accounts is P500,000) 1,500,000
Trade installments receivable due 1 - 18 months,
including unearned finance charge of P50,000 850,000
Trade accounts receivable from officers, due currently 150,000
Trade accounts on which postdated checks are held and no entries
were made on receipt of checks 200,000
Total 8,200,000
What amount should be reported as trade accounts receivable at year-end?
a. 4,650,000
b. 4,700,000
c. 4,150,000
d. 4,050,000
Answer A
Solution
Accounts receivable- unassigned 2,000,000

Accounts receivable- assigned 1,500,000
Trade installments receivable (850,000 - 50,000) 800,000
Trade accounts receivable from officers 150,000
Accounts on which postdated checks are held 200,000
Total trade accounts receivable 4,650,000
ACCOUNTING FOR BAD DEBTS
Effective with the current year, Hall Company adopted a new accounting method for estimating the
allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable.
Allowance for doubtful accounts, January 1. 250,000
Provision for doubtful accounts during the current year
at 2% of credit sales of P10,000,000 200,000
Accounts written off 205,000
Estimated uncollectible accounts per aging on December 31 220,000
What amount should be reported as doubtful account expense for current year?
a. 220,000
b. 205,000
c. 200,000
d. 175,000
Answer D
Solution
Allowance for doubtful accounts- January 1 250,000
Doubtful account expense (SQUEEZE) 175,000
Total 425,000
Accounts written off (205,000)
Allowance for doubtful accounts - December 31 220,000

Laad Company provided the following data for the current year:
Allowance for doubtful accounts - January 1 180,000
Sales 9,500,000
Sales returns and allowances 800,000
Sales discounts 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful account expense at the rate of 5% of net sales.
What amount should be reported as doubtful account expense?
a. 435,000
b. 425,000
c. 475,000
d. 415,000
Answer B
Solution
Sales 9,500,000
Sales returns and allowances (800,000)
Sales discounts (200,000)
Net sales 8,500,000
Doubtful accounts expense (5% x 8,500,000) 425,000

ACCOUNTS

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Accounts Receivable

Accounts receivable on January 1 1,300,000

Credit sales 5,400,000

Collection from customers, excluding recovery 4,750,000

Accounts written off 125,000

Collection of accounts written off in prior year

(customer credit was not reestablished) 25,000

Estimated uncollectible receivables per aging of receivables

Solution 18-1 Answer A

Accounts receivable - January 1 1,300,000

add: Credit sales 5,400,000

Less: Collectioj from customers 4,750,000

accounts written off 125,000. 4,875,000

Accounts receivable - December 31 1,825,000

Merchandise inventory on December 31 1,400,000

Collections from customers 4,000,000

What amount should be reported as accounts receivable on December 31?

Inventory- December 31 (1,400,000)

Cost of goods sold 5,600,000

Markup on cost (40% x 5,600,000) 2,240,000

Sales (140% x 5,600,000) 7,840,000

Collections from customers (4,000,000)

Accounts receivable - December 31 3,840,000

Sales- cash and credit 5,900,000

Cash received from credit customers, all of whom

took advantage of the discount feature of the

credit terms 4/10, n/30 3,024,000

Cash received from cash customers 2,100,000

Credit memorandom issued to credit customers

for sales returns and allowances 250,000

Cash refunds given to customers for sales

returns and allowances 20,000

Recoveries on accounts receivable written off as

uncollectible in prior periods not included in

cash received from customer stated above 80,000

Accounts receivable 950,000

Allowance for doubtful accounts 100,000

The entity provided for uncollectible account 100,000

What amount should be recorded as accounts receivable on December 31?

Accounts receivable- January 1 950,000

Credit sales 3,800,000

Cash received from credit customers (3,024,000)

Sales discount (126,000)

Accounts receivable written off (50,000)

Accounts receivable - December 31 1,300,000

TRADE AND OTHER RECEIVABLES

Miami Company reported the following information at year-end:

Trade accounts receivable 930,000

Allowance for uncollectible accounts (20,000)

Claim against shipper for goods lost

in transit in November 30,000

Selling price of unsold goods sent by

Miami on consignment at 130% of cost and

not included in Miami's ending inventory 260,000

Security deposit on lease of warehouse

used for storing some inventories 300,000

Trade accounts receivable 930,000

allowance for uncollectible accounts (20,000)

Claim receivable 30,000

Total trade and other receivables 940,000