Reference no: EM132833171

The adjusted trial balance of Karen Company as of December 31, 2018 shows the following:

                                         Debit                      Credit

Accounts receivable P1,000,000
Allowance for bad debts                             P40,000

Additional information:

1. Cash sales of the company represents 10% of gross sales.
2. 90% of the credit sales customers do not take advantage of the 2/10, n/30 terms.
3. It is expected that cash discount of P6,000 will be taken on accounts receivable outstanding at December 31, 2019.
4. Sales returns in 2019 amounted to P400,000. All returns were from charge sales.
5. During 2019, accounts totaling to P44,000 were written off as uncollectible; bad debt recoveries during the year amounted to P3,000.
6. The allowance for bad debts is adjusted so that it represents certain percentage of the outstanding accounts receivable at year end. The required percentage at December 31, 2019 is 150% of the rate used on December 31, 2018.

Required: Based on the above and the result of your audit, answer the following:

Problem 1. The accounts receivable as of December 31, 2019

Problem 2. The allowance for doubtful accounts as of December 31, 2019

Problem 3. The net realizable value of accounts receivable as of December 31, 2019

Problem 4. The doubtful account expense for the year 2019