Reference no: EM133117795
Question 1 - Rifle Co. is a distributing company selling toy guns to retailers at 10/15, 5/20, n/30 and it provides for uncollectible accounts based on aging of receivables at year-end. The balance of selected accounts taken from the December 31, 2020 statement of financial position are as follows:
Accounts Receivable - P19,800; Allowance for Bad Debts - P300
The following transactions (in summary) affecting accounts receivable occurred during the year ended December 31, 2021:
Sales on account - 20,180
Cash received from customers - 20,000
Cash received includes the following:
Customers paying within the 15-day discount period - ?
Customers paying within the 20-day discount period - 3,800
Recovery of accounts written off - 106
Customers paying beyond the discount period - 15.84444% of customers paying within 15 days
Accounts receivable written off as worthless - 20
Credit memoranda for sales returns - 512
An aging of the accounts receivables and uncollectible accounts at December 31, 2021 revealed the following:
An aging of the accounts receivables and uncollectible accounts at December 31, 2021 revealed the following:
Age - Amount | Probability of Non-collection
Less than 30 days - 4,100 | 5%
31-90 days - 2,400 | 8%
91-120 days - 563 | 10%
More than 120 days - Balance | 17%
1. At what amount should Bad Debts Expense be reported at December 31, 2021 Income Statement?
2. At what amount should A/R (net of Allowance for Bad Debts) be reported at December 31, 2021 Statement of Financial Position?
Question 2 - Floch Company reported inventory on December 31, 2021 at P6,000,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following:
1. Included in the physical count were goods billed to a customer FOB shipping point on December 30, 2021. These goods had a invoice price of P150,000 at 120% and were picked up by the carrier on January 15, 2022.
2. Goods shipped FOB shipping point on December 31, 2021 from a vendor were received on January 15, 2022. The invoice cost was P300,000.
3. Goods sold to a customer on December 31, 2021 which are being held for the customer to call at the customer's convenience with a cost of P200,000 were included in the count.
4. Goods worth P25,000 bought from a vendor on December 28, 2021 and shipped a day after via Free Carrier is excluded from count. The shipment is received on January 3, 2022.
5. Goods in the warehouse sold to a loyal customer worth P500,000 on December 29, 2021 was excluded. Shipping term: Ex-works
1. At what amount should Inventories be reported at December 31, 2021?
2. Assuming that Item 5 is sold via CFS and item 4 is inventory sold under a buyback agreement, at what amount should Inventories be reported at December 31, 2021?