Reference no: EM132804674

Problem - Nova Company reported the following receivables on December 31, 2018:

Accounts receivable, net of P520,000 allowance for doubtful accounts 3,840,000

Interest receivable 190,000

Notes receivable 4,000,000

- The notes receivable comprised:

P1,000,000 note dated October 31,2018, with principal and interest payable on October 31,2019.

P3,000,000 note dated March 31,2018, with principal and 8% interest payable on March 31,2019.

- During 2019, sales revenue totaled P21,200,000, P19,800,000 cash was collected from customers, and P410.000 in accounts receivable were written off. All sales are made on a credit basis.

- Doubtful accounts expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.

Required -

1. What amount should be reported as interest income for 2019?

2. What amount should be reported as doubtful accounts expense for 2019?