Reference no: EM132768591
Question - In preparing the draft financial statements of Candice Company for the year ended December 31, 2018, an analysis of the Accounts Receivable account revealed the following:
Trade accounts receivable (current) P2,000,000
Past due trade accounts 450,000
Uncollectible accounts 75,000
Credit balances in customer's accounts (80,000)
Trade notes receivable dishonored 220,000
Due from consignee 350,000
Total P3,015,000
The uncollectible accounts were identified as worthless accounts.
The due from consignee accounts represents the cost of the goods sent out to Grace Company, the consignee. Of the goods sent out, Grace Company was able to sell goods costing for P100,000 for P150,000. A 10% commission was charged by Grace Company as per agreement with Candice Company and remitted the balance. The cash was received in January 2019.
The balance of the allowance for doubtful accounts before adjustment is a credit of P45,000. Based on past experience the allowance should be maintained to equal 6% of trade receivables, net of amount due from the consignee who is bonded. Candice Company has not provided yet for the 2018 bad debt expense.
What the allowance for doubtful accounts after adjustment?
a. 160,200
b. 164,700
c. 168,300
d. 169,200