Reference no: EM132849947

Question - Hen Company provided for doubtful accounts expense monthly at 3% of credit sales. The balance in the allowance for doubtful accounts was P1,000,000 on January 1, 2020. During 2020 credit sales totaled P20,000,000 interim provisions for doubtful accounts were made at 3% of credit sales, P200,000 accounts were written off and recoveries of accounts previously written off amounted to P50,000.

An aging of accounts receivable was made on December 31, 2020.

1-60 days amount to P6,000,000 and 10% uncollectible;

61-180 days amount to P2,000,000 and 20% uncollectible;

181 - 360 days amount to P1,500,000 and 30% uncollectible;

While more than 1 year old receivables amount to P500,000 and is 50% uncollectible.

Based on the review of the "more than one year" category, additional accounts of P100,000 are to be written off on December 31, 2020.

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

Using Hen Company data, what is the year-end adjustment to the allowance for doubtful accounts on December 31, 2020?