Reference no: EM132825940
Questions -
Q1) At the beginning of current year, Allen Company 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 P235,000, 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 receivables.
The following schedule was prepared.
Percent uncollectible
Not yet due 1,700,000 NIL
1-30 days past due 1,200,000 5
31-60 days past due 100,000 25
61-90 days past due 150,000 50
Over 90 days past due 120,000 100
Additional accounts to be written off 30,000
Requirements -
What is the required allowance for doubtful accounts at year-end?
How much would be the doubtful accounts expense for the current year?
What is the adjusting entry for the doubtful accounts expense for the current year?
What is the net realizable value of accounts receivable at year-end?
Q2) At the beginning of current year, Lanx Company reported the following balances:
Accounts receivable 600,000
Allowance for doubtful accounts 25,000
The following transactions took place in the current year.
1) Sales-cash and credit 3,070,000
2) Cash received from credit customers 2,455,000
3) Cash received from credit customers who took advantage of the 3/10, n/30 credit terms (included in No.2) 1,455,000
4) Accounts receivable written off as worthless 20,000
5) Cash received from cash customers 470,000
6) Credit memo for sales return and allowances issued to credit customers 55,000
7) Cash refunds to cash customers 10,000
8) Recoveries of accounts written off, not included in above collections 5,000
Requirements -
Prepare journal entries to record the transactions.
Prepare the adjustment for doubtful accounts if the entity provides for doubtful accounts equal to 2% of net credit sales.
Determine the net realizable value of accounts receivable at year-end?