INTERMEDIATE ACCOUNTING 1
ALVAREZ / PEDROS
RECEIVABLES (PART 1)
I. TRADE & NONTRADE RECEIVABLES
1. Princess Company provided the following balances as of December 31, 2024:
Trade accounts receivable
Customer’s accounts reporting credit balances
Advances to employees (due 6/30/25)
Claims against common carriers
Subscription receivable (due in 120 days)
Special deposits on contract bids
Installment receivable (normally due 1year to two years)
Allowance for doubtful accounts
Trade notes receivable
Advances to affiliates
Creditors’ accounts with debit balances
Advance payments for purchase of merchandise
Receivable from shareholders (due 12/31/26)
Accrued interest income
Dividend receivable
P220,000
20,000
160,000
80,000
270,000
520,000
450,000
10,000
90,000
140,000
30,000
60,000
250,000
30,000
190,000
a. What total amount should be reported as trade and other receivables under current assets
at year-end?
b. What total amount should be reported as trade and other receivables under noncurrent
assets at year-end?
2. When examining the accounts of Jack Company, you ascertain those balances relating to both
receivables and payables are included in a single controlling account called receivables control that
has a debit balance of P4,850,000. An analysis of the make-up of this account revealed the following:
Accounts receivable- customers
Accounts receivable – officers
Debit balances – creditors
Postdated checks from customers
Subscriptions receivable
Accounts payable for merchandise
Credit balances in customers' accounts
Cash received in advance from customers
for goods not yet shipped
Expected bad debts
Debit
P7,800,000
500,000
300,000
400,000
800,000
Credit
P4,500,000
200,000
100,000
150,000
After further analysis of the aged accounts receivable, you determined that the allowance for doubtful
accounts should be P200,000.
What is the correct total of current net receivables?
II. ACCOUNTS RECEIVABLE
3. Prepare the necessary journal entries under gross method and net method of accounting for
accounts receivable:
a) Sold merchandise on credit for P120,000. Terms: 2/10, n/30.
b) Collected the amount due (within the discount period).
c) Collected the amount due (beyond the discount period).
1|Page
INTERMEDIATE ACCOUNTING 1
ALVAREZ / PEDROS
4. On August 5, 2024, Inferno Inc. sold 80 air cooler units. The sale price for each unit is P25,000. All
of the sales are subject to terms 3/10, n/30.
a. Using the gross method, prepare journal entries to record the sale and to record receipt of
the full payment assuming it was received on August 15, 2024.
a. Using the net method, prepare journal entries to record the sale and to record receipt of the
full payment assuming it was received on August 30, 2024.
5. Mang Inasar Company provided the following information for the current year:
Accounts receivable - January 1
Accounts written off as worthless
Sales returns and allowances
Sales discounts
Credit sales
Collection from customers, excluding recovery of accounts written off
Recovery of accounts written off
Allowance for uncollectible accounts
Allowance for sales returns
650,000
40,000
45,000
30,000
2,700,000
1,160,000
20,000
110,000
50,000
a. What is the balance of accounts receivable as of December 31?
b. What is the “net realizable value” of accounts receivable on December 31?
6. Seven Evelyn Inc. had an accounts receivable balance of P225,000 on December 31, 2024 and
P150,000 on December 31, 2025. The company wrote off P50,000 of accounts receivable during
2024. Sales for 2024 totaled P600,000 and 75% of sales were on account. The company offered a two
percent discount if paid within five days. Moreover, 5% of the credit customers returned
merchandise to the company and P20,000 that were previously written off accounts were recovered.
All of the credit customers paid beyond the discount period.
The amount collected from customers on accounts receivable during 2024 was?
III. ALLOWANCE FOR DOUBTFUL ACCOUNTS
7. 25 Chicken Company reported accounts receivable of P8,000,000 on December 31, 2024 and
allowance for doubtful accounts of P1,000,000 on January 1, 2024. During the year, accounts of
P400,000 were written off and recoveries of accounts written off totaled P100,000.
Time outstanding
Under 30 days
31 - 180 days
181 - 360 days
More than one year
Accounts receivable
5,000,000
1,500,000
1,000,000
500,000
Percent uncollectible
10%
20%
50%
100%
a. What amount of allowance for doubtful accounts should Windell Company report in its
2024 balance sheet?
b. What amount should be reported as doubtful accounts expense for the current year?
2|Page
INTERMEDIATE ACCOUNTING 1
ALVAREZ / PEDROS
8. At the beginning of current year, Six Slices Inc. reported that the allowance for doubtful accounts
has a credit balance of P170,000. Bad debt recoveries and bad debts written off in the current year
were P30,000 and P35,000, respectively.
The allowance account had been previously calculated as a percentage of net sales. It was decided
however to provide for doubtful accounts commencing with the year-end adjusting entry on the
basis of an analysis of the age of the accounts receivable.
The following schedule was prepared:
Not yet due
1-30 days past due
31-60 days past due
61-90 days past due
Over 90 days past due
Additional accounts to be written off
1,700,000
1,200,000
100,000
150,000
120,000
30,000
Percent collectible
100
95
75
50
10
a. What amount should be reported as required allowance for doubtful accounts at year-end?
b. How much would be the doubtful accounts expense for the current year?
c. What amount should be reported as net realizable value of accounts receivable at year-end?
9. At the beginning of the year, Gento Company reported the following:
Accounts receivable
1,460,000
Allowance for doubtful accounts
120,000
Additional information for the current year:
1) Gross sales of the entity (20% represents cash sales)
2) Accounts receivable written off as worthless
3) Cash received from credit customers
4) Recoveries of accounts written off, not included in above collections
5) Credit memo for sales return and allowances issued to credit customers
6) Cash refunds to cash customers
7) Cash discounts granted to credit customers who took advantage of the
credit terms
P8,000,000
70,000
3,600,000
10,000
50,000
30,000
20,000
The allowance for doubtful accounts is adjusted so that it represents 3% of the outstanding accounts
receivable at year-end.
a. What amount should be reported as required allowance for doubtful accounts at year-end?
b. How much would be the doubtful accounts expense for the current year?
10. On its December 31, 2023 balance sheet, Beluga Company reported accounts receivable of
P855,000, net of an allowance for doubtful accounts of P45,000. On December 31, 2024, Beluga Co.’s
balance sheet showed gross accounts receivable of P922,000 and Beluga Co.’s income statement
reported sales of P3,000,000. During the year, accounts receivable of P35,000 were written off and
P18,000 were recovered. Based on past experience, 5% of Beluga Co.’s ending accounts receivable
are uncollectible.
How much should Beluga Company report as uncollectible accounts expense on its 2024
income statement?
3|Page
INTERMEDIATE ACCOUNTING 1
ALVAREZ / PEDROS
11. During the current year, Kathniel Inc. reported the following: beginning allowance for doubtful
accounts, P200,000; sales, P9,500,000; sales returns and allowances, P1,000,000; sales discounts,
P500,000; accounts written off, P300,000; and recovery of accounts written off, P50,000. It is
estimated that 5% of net sales may prove uncollectible.
a. What amount should be reported as doubtful accounts expense?
b. What is the ending allowance for doubtful accounts?
12. On its December 31, 2023 balance sheet, Sarajie Co. reported accounts receivable of P855,000,
net of an allowance for doubtful accounts of P45,000. On December 31, 2024, Sarajie Co.’s balance
sheet showed gross accounts receivable of P922,000 and Sarajie Co.’s income statement reported
sales of P3,000,000, 60% are credit sales. During the year, accounts receivable of P35,000 were
written off and P18,000 were recovered. Based on past experience, 2% of Sarajie Co.’s credit sales
are uncollectible.
How much should Sarajie Co. report as accounts receivable net of allowance for doubtful
accounts of on its 2024 balance sheet?
4|Page