Practical Accounting 1
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ACCOUNTS RECEIVABLE
1. Roxy Company had the following information for 2009 relating to its accounts receivable: Accounts receivable at January 1 Credit sales Collections from customers, excluding recovery Accounts written off Collection of accounts written off in prior year (customer credit was not reestablished) Estimated uncollectible receivables per aging of receivables at December 31
1,300,000 5,400,000 4,750,000 125,000 25,000 165,000
On December 31, 2009, the balance of accounts receivable, before allowance for doubtful accounts should be a. 1,825,000 b. 1,850,000 c. 1,950,000 d. 1,990,000 2. The following data relate to accounts receivable of Jay Company for the year 2009: Accounts receivable 1/1 Credit sales Sales returns Accounts written off Collections from customers Estimated future sales returns at 12/31 Estimated uncollectible accounts at 12/31
650,000 2,700,000 75,000 40,000 2,150,000 50,000 110,000
What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, at December 31, 2009? a. 1,200,000 b. 1,125,000 c. 1,085,000 d. 925,000 3. Rex Company had the following information relating to its accounts receivable for the year ended December 31,2009: Accounts receivable at January 1 Allowance for doubtful accounts at January 1 Credit sales Collections from customers Accounts written off Estimated uncollectible receivable at December 31
1,200,000 60,000 5,300,000 4,650,000 75,000 110,000
1. At December December 31, 31, 2009, Rex’s Rex’s allowan allowance ce for doubtful doubtful accounts accounts should should be
a. 135,000 b. 125,000 c. 110,000 d. 95,000 2. At December December 31, 31, 2009, Rex’s Rex’s accounts accounts receiva receivable, ble, before before allowance allowance for for doubtful doubtful accounts, should be a. 1,850,000 b. 1,835,000 c. 1,815,000 d. 1,775,000 Problem 7-4 (IAA)
The following data were taken from the records of Infra Company for the year ended December 31, 2009: Sales on account Notes received to settle accounts Provision for doubtful accounts Acco Accoun unts ts rece receiv ivab able le dete determ rmin ined ed to be wort worthl hles esss Purchases on account Payments to creditors Discounts allowed by creditors Merchandise returned by customer Collections received to settle accounts Notes given to creditors in settlement of accounts Merchandise returned to suppliers Payments on notes payable Discounts taken by customers Collections received in settlement of notes
3,600,000 400,000 90,000 25,0 25,000 00 3,900,000 3,200,000 260,000 15,000 2,450,000 250,000 70,000 100,000 40,000 180,000
What is the net realize value of accounts receivable on December 31, 2009? a. 605,000 b. 890,000 c. 825,000 d. 670,000 Problem 7-5 (CGAC)
When examining the accounts of Brute Company, You ascertain that balances relating to both receivables and payables are included in a single controlling account called receivables control that has a debit balance revealed the following:
Debit
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
Credit
7,800,000 500,000 300,000 400,000 800,000 4,500,000 200,000 100,000 150,000
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? a. 8,950,000 b. 8,800,000 c. 8,600,000 d. 8,850,000 Problem 7-6 (AICPA Adapted)
On December 31, 2009 balance sheet of Miami Company, the current receivables consisted of the following: Trade accounts receivable Allowance for uncollectible accounts Claim against shipper for goods sent by Miami on consignment at 130% of cost (not included in in Miami's ending in inventory) Security deposit on lease of warehouse used for storing some inventories Total
930,000 ( 20,000)
260,000 300,000 1,500,000
Problem 7-7 (AICPA Adapted)
On January 1, 2009, Mann Company's allowance for doubtful accounts had a credit balance of P300,000. During 2009 Mann charged P640,000 to doubtful accounts expense, wrote off P460,000 of uncollectible accounts receivable, and unexpectedly recovered P120,000 of bad debts written off in the prior year. The allowance for d oubtful accounts at December 31, 2009 would be a. 480,000 b. 600,000 c. 640,000
d. 940,000 Problem 7-8 (PHILCPA Adapted)
The balance sheet of Square Company shows accounts receivable at January 1, 2009 as follows: Accounts receivable Allowance for doubtful accounts
450,000 9,000
During 2009, transactions relating to the accounts receivable were as follows: Sales on account, P4,800,000. Cash collections of accounts receivable totaled P3,920,000, after discounts of P80,000 were allowed for prompt payment. Bad accounts previously written off prior to 2009 amounting to 5,000 were recovered. The company decided to provide P26,000 for doubtful accounts by a journal entry at the end of the year. Accounts receivable of P700,000 have been pledged to a local bank on a loan of P400,000. Collections of P150,000 were made on these receivables (not included in the collections previously given) and applied as partial payment for the loan. Estimated realizable value of accounts receivable at December 31, 2009 was a. 1,065,000 b. 1,060,000 c. 1,074,000 d. 1,074,000 Problem 7-9 (AICPA Adapted)
Orr Company prepared an aging of its accounts receivable at December 31, 2009 and determined that the net realizable value of the accounts receivable 2009 was P2,500,000. Additional information is available as follows: Allowance for uncollectible accounts at 1/1 – credit balance Accounts written off as uncollectible Accounts receivable at 12/31 Uncollectible accounts recovery
280,000 230,000 2,700,000 50,000
For the year ended December 31, 2009, Orr's uncollectible accounts expense would be a. 230,000 b. 200,000 c. 150,000
d. 100,000 Problem 7-10 (AICPA Adapted)
An analysis and aging of Jay's Company's accounts receivable at December 31, 2009 disclosed the following: Accounts receivable Allowances for uncollectible accounts, per book Accounts estimated to be uncollectible
9,000,000 500,000 640,000
At December 31, 2009, the net realizable value of accounts receivable should be a. 8,860,000 b. 8,500,000 c. 8,360,000 d. 7,860,000 Problem 7-11 (AICPA Adapted)
Mill Company's allowance for doubtful accounts was P1,000,000 at the end of 2009 and P900,000 at the end of 2005. For the year ended December 31, 2009, Mill reported bad debt expense of P160,000 in its income statement. What amount did Mill debit to the appropriate account in 2009 to write off actual bad debts? a. 60,000 b. 100,000 c. 160,000 d. 260,000 Problem 7-12 (AICPA Adapted)
The following information pertains to Tara Company's accounts receivable at December 31, 2009: Days outstanding 0 – 60 61 – 120 Over 120
Estimated Amount 1,200,000 900,000 1,000,000 3,100,000
% uncollectible 1% 2% 6%
During 2009, Tara wrote off P70,000 in receivables and recovered P40,000 that had been written off in prior years. Tara's January 1, 2009, allowance for uncollectible accounts
was P100,000. Under the aging method, what amount of allowance for uncollectible accounts should Tara report at December 31, 2009? a. 90,000 b. 100,000 c. 130,000 d. 190,000 Problem 7-13 (AICPA Adapted)
On March 31, 2009, Vale Company had an unadjusted credit balance of P100,000 in its allowance for uncollectible accounts. An analysis of Vale's trade accounts receivable at that date revealed the following:
Ag e 0 – 30 days 31 – 60 days Over 60 days
Amount 6,000,000 400,000 200,000
Estimated uncollectible 5% 10% 140,000
What amount should Vale report as allowance for uncollectible accounts in its March 31, 2009, balance sheet? a. 480,000 b. 400,000 c. 380,000 d. 300,000 Problem 7-14 (AICPA Adapted)
Abbeville Company had the following accounts receivable and allowance for uncollectible accounts at the end of 2009 before any expense adjustment: Accounts receivable Allowance for uncollectible accounts
12,000,000 800,000
Sale in 2009 totaled P80,000,000 (8% of sales were for cash), and write-offs of customer accounts totaled P600,000. Allowance for uncollectible accounts is estimated to be 2% of accounts receivable. What is the balance in the allowance account at the beginning of 2009? a. 1,400,000 b. 1,160,000 c. 200,000 d. 800,000
Problem 7-15 (PHILCPA Adapted)
Delta Company sells to wholesalers on terms 2/15, net 30. Delta has no cash sales but 50% of Delta's customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta's customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta's trade accounts receivable at December 31, 2009 revealed the following: Age 0 – 15 days 16 – 30 days 31 – 60 days Over 60 days
Amount 2,000,000 1,200,000 100,000 50,000 3,350,000
Collectible 100% 95% 90% 50%
In its December 31, 2009 balance sheet, what amount should Delta report as allowance for discounts? a. 20,000 b. 32,000 c. 33,500 d. 40,000 Problem 7-16 (AICPA Adapted)
The following accounts were abstracted from Manchester Company's unadjusted trial balance at December 31, 2009:
Accounts receivable Allowance for doubtful accounts Net credit sales
Debit 5,000,000 40,000
Credit
20,000,000
Manchester estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2009, the allowance for doubtful accounts should have a credit balance of a. 110,000 b. 150,000 c. 190,000 d. 600,000 Problem 7-17 (AICPA Adapted)
Ward Company estimates its uncollectible accounts expense to be 2% of credit sales. Ward's credit sales for 2009 were P10,000,000. During 2009, Ward wrote off P180,000 of uncollectible accounts. Ward's allowance for uncollectible accounts had a P150,000 balance on January 1, 2009. In its 2009 income statement, what amount should Ward report as uncollectible accounts expense? a. 230,000 b. 200,000 c. 180,000 d. 170,000 Problem 7-18 (AICPA Adapted)
All of Ladd Company's sales are on a credit basis. The following information is available for 2009: Allowance for doubtful accounts – January 1 Sales Sales returns Accounts written off as uncollectible
180,000 9,500,000 800,000 200,000
Ladd provides for doubtful accounts expense at the rate of 3% of net sales. At December 31, 2009, the allowance for doubtful accounts balance should be a. 281,000 b. 265,000 c. 261,000 d. 241,000 Problem 7-19 (AICPA Adapted)
At January 1, 2009, Jamin Company had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past experiences, 2% of Jamin's credit sales have been uncollectible. Credit sales for 2009 were P9,000,000. In its December 31, 2009 balance sheet, what amount should Jamin report as allowance for uncollectible accounts? a. 115,000 b. 180,000 c. 245,000 d. 440,000 Problem 7-20 (AICPA Adapted)
The unadjusted trial balance of Barr Company at December 31, 2009, included the following accounts:
Allowance for doubtful accounts Sales Sales return
Debit 16,000
Credit
7,225,000 125,000
Barr estimates its uncollectible receivables at 2% of net sales. For 2009, Barr should report doubtful accounts expense of a. 158,000 b. 144,500 c. 142,000 d. 126,000 Problem 7-21 (AICPA Adapted)
Effective with the year ended December 31, 2009, 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. The following data are available: Allowance for doubtful accounts, 1/1 Provision for doubtful accounts during 2009 (2% of credit sales of P10,000,000) Accounts written off Estimated un uncollectible ac accounts pe per pa paging 12 12/31
250,000 200,000 205,000 220,000
After year-end adjustment, the doubtful accounts expense of 2009 should be a. 220,000 b. 205,000 c. 200,000 d. 175,000 Problem 7-22 (AICPA Adapted)
Clark Company's allowance for doubtful accounts had a credit balance of P120,000 at December 31, 2005. Clark accrues doubtful accounts expense at 4% of credit sales. During 2009 Clark's credit sales amounted to P15,000,000, and uncollectible accounts totaling P480,000 were written off. The aging of accounts was required at December 31, 2009. Clark's doubtful accounts was required at December 31, 2009. Clark's doubtful accounts expense for 2009 would be a. 480,000 b. 500,000 c. 600,000 d. 860,000
Problem 7-23 (PHILCPA Adapted)
Germany Company started its business on January 1, 2009. After considering the collection experience of other companies in the industry, Germany established an allowance for doubtful accounts estimated at 5 % of credit sales. Outstanding accounts receivable recorded on December 31, 2009 totaled P460,000, while the allowance for doubtful accounts had a credit balance of P50,000 after recording estimated doubtful accounts expense for December and after writing off P10,000 of uncollectible accounts. Further analysis of the company's accounts showed that merchandise purchased in 2009 amounted to P1,800,000 and ending merchandise inventory was P300,000. Goods were sold at 40% above cost. co st. 80% of total sales were on account. accou nt. Total collections from customers, on the hand, excluding proceeds from cash sales, amounted to P1,200,000. Considering the given data, the accounts receivable and allowance for doubtful accounts are Accounts receivable
a. 10 10,000 understated b. 20 20,000 understated c. 330,000 understated d. 330,000 understated
Allowance for doubtful accounts
24,000 understated 34,000 understated 40,000 understated 50,400 understated
