ACTIVITY: Accounts Receivable
1. Information from the records of Stormfall Co. is shown below:
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•
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•
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Accounts receivable - net of ₱8,000 credit balance in
customers' accounts
Notes receivable (trade)
Notes receivable (non-trade), ₱15,000 collectible within
one year
Dividends receivable
Subscriptions receivable
Advances to officers and employees (due in 10 months)
Accounts payable - net of ₱10,000 debit balance in
suppliers' accounts
100,000
15,000
30,000
2,000
2,000
4,000
3,000
How much are the following?
Total trade receivables
Total current receivables
a. 132,000
154,000
b. 123,000
154,000
c. 143,000
162,000
d. 123,000
145,000
2. On December 27, 20x1, ABC Co. received a sale order for a credit sale of goods with selling price of
₱3,000. The goods were shipped by ABC on December 31, 20x1 and were received by the buyer on
January 2, 20x2. The related shipping costs amounted to ₱20. ABC Co. collected the receivable on
January 5, 20x2. If the term of the sale is FOB destination, freight collect, how much net cash is collected
on January 5, 20x2?
a. 3,020
b. 3,000
c. 2,980
d. 0
3. Soap Co. has the following information on December 31, 20x1 before any year-end adjustments.
Allowance for doubtful accounts, Jan. 1
30,400
Write-offs
19,000
Recoveries
3,800
Sales (including cash sales of ₱380,000)
2,280,000
Sales returns and discounts (including ₱3,800 sales
22,800
returns on cash sales)
Accounts receivable, Dec. 31
570,000
Percentage of credit sales
3%
How much is the recoverable historical cost of accounts receivable?
a. 498,370
b. 502,630
c. 486,780
d. 478,970
4. Washing Co. has the following information on December 31, 20x1 before any year-end adjustments.
Accounts receivable, Jan. 1
80,000
Net credit sales
270,000
Collections from customers (including recoveries)
140,000
Allowance for doubtful accounts, Jan. 1
10,000
Write-offs
5,000
Recoveries
1,000
Percentage of receivables
5%
How much is the bad debt expense?
a. 4,250
b. 4,300
c. 4,550
d. 10,300
5. Fabric Co. sells to wholesalers on terms of 2/15, net 30. An analysis of Fabric Co.’s trade receivable
balances on December 31, 20x1, revealed the following:
Age in days
Receivable balances
0 – 15
180,000
16 – 30
108,000
31 – 60
90,000
61 – 90
72,000
91 – 120
54,000
121 – 150
36,000
Total accounts receivables
540,000
Fabric Co. uses the aging of receivables method. The estimated percentages of collectability based on past
experience are shown below:
Accounts that are overdue for less than 31 days
97%
Accounts that are overdue 31 – 60 days
90%
Accounts that are overdue 61 – 90 days
85%
Accounts that are overdue 91 – 120 days
65%
Accounts that are overdue for over 120 days
40%
The allowance for doubtful accounts has a balance of ₱18,000 as of January 1, 20x1. Write-offs and
recoveries during the year amounted to ₱6,000 and ₱3,000, respectively.
How much is the doubtful accounts expense for the year?
a. 15,600
b. 9,000
c. 22,600
d. 28,200
Use the following information for the next two questions:
ABC Co. has the following information on December 31, 20x1 before any year-end adjustments.
Net credit sales
6,300,000
Accounts receivable, December
976,500
Allowance for doubtful accounts, Dec. 31 (before any
necessary year-end adjustments)
Percentage of credit sales
53,550
2%
The aging of receivables is shown below:
Days outstanding
0 – 60
61 – 120
Over 120
Total accounts receivables
Receivable balances
378,000
283,500
315,000
976,500
% uncollectible
1%
2%
6%
Additional information:
• ABC Co. uses the percentage of credit sales in determining bad debts in monthly financial reports and
the aging of receivables for its annual financial statements.
• Accounts written-off during the year amounted to ₱119,700 and accounts recovered amounted to
₱28,350.
• As of December 31, ABC Co. determined that ₱63,000 accounts receivable from a certain customer
included in the “61-120 days outstanding” group is 95% collectible and a ₱31,500 account included in
the “Over 120 days outstanding” group is worthless and needs to be written-off.
6. How much is the balance of the allowance for doubtful accounts on January 1, 20x1?
a. 12,600
b. 18,900
c. 19,200
d. 23,400
7. How much is the adjusted bad debt expense to be reported in the year-end financial statements?
a. 123,300
b. 128,700
c. 143,300
d. 132,300
8. ABC Co. has the following information before any year-end adjustment.
Accounts receivable, Dec. 31
600,000
Allowance for doubtful accounts, Jan. 1
18,000 (Dr.)
Percentage of receivables
2%
Write-offs and recoveries during the year amounted to ₱22,800 and ₱3,000, respectively. How much is
the bad debts expense for the year?
a. 13,800
b. 26,800
c. 49,800
d. 52,800