Reference no: EM132998839

Questions -

Q1. Karina Company provided the following information for 2016:

Accounts receivable - January 1 2,000,000

Credit sales 10,000,000

Collection from customers, excluding the recovery of accounts written off 8,000,000

Accounts written off as worthless 100,000

Sales returns 500,000

Recovery of accounts written off 50,000

Estimated future sales returns on December 31 150,000

Estimated uncollectible accounts on December 31 per aging 300,000

What is the "amortized cost" of accounts receivable on December 31, 2016?

Q2. Aljon Company reported accounts receivable P8,000,000 on December 31, 2016 and allowance for doubtful accounts P1,000,000 on January 1, 2016. During the year, accounts receivable amounting to P400,000 were written off and recoveries of accounts written off totaled P100,000.

Amount Uncollectible:

Under 30 days 5,000,000 10%

31 - 180 days 1,500,000 20%

181 - 360 days 1,000,000 50%

More than one year 500,000 100%

What amount should be reported as doubtful accounts expense for the current year?

Q3. During the current year, Karjon Company reported beginning allowance for doubtful accounts P200,000, sales P9,500,000, sales returns and allowances P1,000,000, sales discounts P500,000, accounts written off 300,000 and recovery of accounts written off P50,000. It is estimated that 5% of net sales may prove uncollectible. What is the ending allowance for doubtful accounts?

Q4. On January 1, 2016, Janelle Company sold equipment with a carrying amount of P4,800,000 in exchange for P6,000,000 noninterest bearing note due January 1, 2019. There was no established exchange price for the equipment. The prevailing interest rate for this note was 10%. For computation of Present value, use up to seventh decimal place.

a. What amount should be reported as gain or loss on sale of equipment?

b. What amount should be reported as interest income for 2016?