Homework answers / question archive / Problem 1Pizza Corporation reported the following information on its balance sheet dated December 2019:    Accounts Receivable                                 P4,403,000    Less: Allowance for Doubtful Accounts                   291,000                                                              P4,694,000                                                         The following events occurred during 2020: Made credit sales of P18,600,000 and cash sales of P4,480,000

Problem 1Pizza Corporation reported the following information on its balance sheet dated December 2019:    Accounts Receivable                                 P4,403,000    Less: Allowance for Doubtful Accounts                   291,000                                                              P4,694,000                                                         The following events occurred during 2020: Made credit sales of P18,600,000 and cash sales of P4,480,000

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Problem 1Pizza Corporation reported the following information on its balance sheet dated December 2019:

   Accounts Receivable                                 P4,403,000

   Less: Allowance for Doubtful Accounts                   291,000

                                                             P4,694,000                                                        

The following events occurred during 2020:

1. Made credit sales of P18,600,000 and cash sales of P4,480,000.
2. Collected P18,414,000 from customers on account.
3. Wrote off 264,000 of accounts considered to be uncollectible
4. Collected P42,000 from customers whose accounts had been written off as uncollectible.
5. Estimated that 5% of the accounts receivable balance at year-end would prove to be uncollectible.

Instructions: Compute for the following:

1. Accounts Receivable balance as of December 31, 2020. 
2. Allowance for Doubtful Accounts balance as of December 31, 2020.
3. Doubtful Accounts Expense for the year ended December 31, 2020.

Problem 2

The following information was obtained from the unadjusted trial balance of the Pie Corporation for the year ending December 31, 2020:

          Accounts Receivable                                            P 2,500,000 Dr

          Allowance for Doubtful Accounts              34,000 Dr

          Sales (90% are on credit)                                      8,400,000 Cr

Instructions:  Determine the following:

1. Doubtful account expense assuming that 6% of the accounts receivable are estimated to be uncollectible.
2. Amortized cost of accounts receivable.

Problem 3
The following are the balances of selected accounts taken from the December 31, 2019 balance sheet of Domino Company:
                  Accounts receivable                                 P546,400
                  Allowance for doubtful accounts                       16,392
The following transactions (in summary) affecting the Accounts Receivable account occurred during the year ended December 31, 2020:
                  Sales - all on account                              P2,622,832
                  Cash received from customers                         2,857,960
The company's credit terms were 2/10, n/30 and customers paying P2,009,842 of the above stated cash took advantage of the discount.
                  Accounts receivable written off as worthless             P18,700
                  Credit memoranda issued for returned sales and 
                     allowances                                             37,000
Required:

1.  Compute for the current balance of Accounts Receivable as of December 31, 2020.  
2. Adjusting journal entry for estimated bad debts on December 31, 2020. The corporation adjusts its allowance account to a percentage of outstanding accounts receivable. The credit experience of the corporation indicates that the percentage rate to be used on December 31, 2020 will be 2/3 of that used on December 31, 2019.        
3. Compute for the balance of Allowance for doubtful accounts to be reported in Domino's December 31, 2020 balance sheet.  

Problem 4
The balance sheet of Shakey's Company shows the accounts receivable balance at December 31, 2019 as follows:

    Accounts Receivable - trade                                         P850,000

    Allowance for Doubtful Accounts                                        8,000

                                                         P842,000                                                                                                        

During 2020, transactions relating to the accounts were as follows:

1. Sales on account, P10,000,000
2. Cash received from collection of accounts receivable totaled P8,820,000 after discounts of P180,000 were allowed for prompt payment.
3. Customers' accounts of P50,000 were ascertained worthless and written off,
4. Bad accounts previously written off prior to 2012 amounting to P20,000 were recovered.
5. Received a 90-day, 12% note for P60,000 from a customer on an overdue account.
6. Accounts receivable of P1,400,000 have been pledged to a local bank on a loan of P800,000. Collections of P300,000 were made on these receivables (not included in the collections previously given) and applied as partial payment to the loan.
7. The company estimates doubtful accounts at 3% of accounts receivable.

Instructions:  Prepare journal entries to record the foregoing transactions.  After preparing the journal entries, determine the amortized cost of the accounts receivable at December 31, 2020.