Reference no: EM133010701

The adjusted trial balance of CPA Co. as of December 31, 2009 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 3gross 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, 2010.
4. Sales returns in 2010 amounted to P400,000. All returns were charge from sales.
5. During 210, accounts totaling to P44,000 were written off as uncollectible; bad debts 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 31,2 010 is 150% of the rate used on December 31, 2009.

Requirements:

Question 1: What is the balance of accounts receivable as of December 31, 2010?

Question 2: What is the allowance for doubtful accounts as of December 31, 2010?

Question 3: What is the net realizable value of accounts receivable as of December 31, 2010? What is the doubtful account expense for the year 2010?

Question 4: What is the ending balance of allowance for doubtful accounts to be presented in the Income Statement?