Reference no: EM132528832

Question - The following information was taken from the records of our company on December 31, 2019:

Accounts Receivable - P421,850

Allowance for bad debts - P33,748

Transactions related to accounts receivable for the year 2020 are given below

1. Merchandise sold on account P724,600

2. Collections made on accounts receivables:

a. On 2009 sales, P125,000

b. On 2010 sales, P340,200

Question - Prepare the necessary adjusting entry at Dec 31, 2020 regarding bad debts expense under each of the following independent scenarios:

a. Allowance for doubtful accounts is estimated to equal the same percentage of accounts receivable as used in the prior period.

b. Per aging of accounts receivable, it is estimated that P57,500 is doubtful of collection.

c. Allowance for doubtful accounts is estimated to equal 10% of accounts receivable.