Reference no: EM133074221

Question -

Q1. JK Company's account balances at December 31 for Accounts Receivable and Allowance for Doubtful Accounts were Php2,100,000 and Php105,000 (Cr.), respectively. An aging of accounts receivable indicated that Php192,000 are expected to become uncollectible. The amount of the adjusting entry for bad debts at December 31 is

a. Php192,000.

b. Php87,000.

c. Php297,000.

d. Php105,000.

Q2. Use the following information for items 3-5 . The December 31, 2020 balance sheet of Sugar Company had Accounts Receivable of Php500,000 and a credit balance in Allowance for Doubtful Accounts of Php33,000. During 2021, the following transactions occurred: sales on account Php1,400,000; sales returns and allowances,Php50,000; collections from customers, Php1,150,000; accounts written off Php35,000; previously written off accounts of Php5,000 were collected.

Q3. If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales to be uncollectible, what is the adjusting entry at December 31, 2021?

Q4. If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 4% of accounts receivable, what is the adjusting entry at December 31, 2021?

Q5. Which basis would produce a higher net income for 2021 and by how much?