Acctg162 – Material 009

1 On December 31, 2015, the “Receivables” account of AA. Company show a debit balance of P5,950,000 Subsidiary details show the
following:
Accounts receivable, P725,000; Loans receivable, P100,000; Instalments receivable, normally due 1 year to two years, P300,000;
Customers’ accounts reporting credit balances arising from sales returns, P30,000; Advance payments for purchase of merchandise,
P150,000; Customers’ accounts reporting credit balances arising from advance payments, P20,000; Cash advances to subsidiary, P400,000;
Claim from insurance company, P15,000; Subscription receivable due in 60 days, P300,000; Accrued interest receivable, P10,000, Deposit
on contract bids, P3,000,000 and Advances to shareholders (collectible in 2018), P1,000,000.
How much is the amount to be presented as “loans and receivables” under current assets section of the balance sheet? 2,600,000

2 On December 31, 2013, the accounts receivable control account of A Company had shown the following elements:
Trade receivables from officers due currently 34,650
Trade accounts receivable from customer X 465,500
Other trade accounts receivable 467,730
Customer’s accounts reporting credit balances arising from sales return 212,300
Advance payments to creditors on purchase orders 174,500
Trade accounts on which post – dated checks are held (no entries were made on receipts of checks) 89,375
Trade installment receivable due 1 – 18 months including unearned finance charges of P55,000) 355,000
Subscriptions receivable due in 45 days 654,985
Interest receivable on bonds 123,450
Advances to affiliated companies 375,095
Accounts known to be worthless 54,675
The trade accounts receivable as of December 31, 2013 is Answer: P1,357,255

3 ABC Company provided some information on their financial records on December 31, 2015:
Accounts receivable, December 2015 1,680,000 Accounts payable, January 1 1,000,000
Collections of account receivable 6,240,000 Accounts payable, December 31 1,500,000
Bad debts 200,000 Cash sales 1,200,000
Inventory , January 1 2,880,000 Purchases 4,800,000
Inventory , December 31 2,640,000 Gross Profit on sales 2, 160,000
Determine the balance of accounts receivable beginning of 2015? 1,920,000

4 Von Company provided the following data for 2014 in relation to its accounts receivable:
Debits
January 1 balance after deducting credit balance of P30,000 530,000
Charge sales 5,250,000
Charge for goods out on consignment 50,000
Shareholders’ subscriptions 200,000
Accounts written off but recovered 10,000
Cash paid to customer for January 1 credit balance 25,000
Goods shipped to cover January 1 credit balance 5,000
Deposit on contract 120,000
Claim, against common carrier 15,000
Advances to supplier 155,000
Credits
Collections from customers’ including overpayment of P50,000 5,200,000
Writeoffs 35,000
Merchandise returns 25,000
Allowances to customers for shipping damages 15,000
Collections on carrier claim 10,000
Collection on subscription 50,000
What is the balance on accounts receivable on December 31, 2014? 595,000

5 The following selected transactions occurred during the year ended December 31, 2015 of XYZ COMPANY:
Gross sales (cash and credit) P 900,736.80
Collections from credit customers, net of 2% cash discount 294,000.00
Cash sales 180,000.00
Uncollectible accounts written off 19,200.00
Credit memos issued to credit customers for sales returns and allowances 10,080.00
Cash refunds given to cash customers for sales returns and allowances 15,168.00
Recoveries on accounts receivable written off in prior years (not included in cash
received stated above) 6,505.20
At year-end, the company provides for estimated bad debts losses by crediting the Allowance for Bad Debts account for 2% of its net credit
sales for the year. The allowance for bad debts at the beginning of the year is P19,327.20. The Accounts Receivable of XYZ COMPANY at
December31, 2015 is: P 391,456.80 if gross / 370,731.26 if NRV

6 For the month of December, the records of Balin Corporation show the following information:
Cash received on accounts receivable P 70,000 Accounts Receivable, December 31 148,000
Cash sales 60,000 Accounts Receivable written off as uncollectible 2,000
Accounts Receivable, December 1 160,000

The corporation uses the direct write-off method in accounting for uncollectible accounts receivable. What are the gross sales for the month of
December? 120,000

7 The financial statements of Katherine Company included the following information:

 Dec 31, 2013 Dec 31, 2014
Account receivable 1,200,000
Allowance for doubtful accounts 20,000
Sales 8,000,000
Cash collected from customers 7,600,000
Among the cash collections was a recovery of P14,000 from a customer whose account had been written off as worthless in 2013. During 2014, it
was necessary to recognize doubtful accounts expense of P50,000 and write off worthless customers’ accounts of P26,000. On December 1, 2014,
a customer settled an account by issuing a 12% six-month note for P400,000. What is the net realizable value of accounts receivable on December
31, 2014? 1,130,000

8 Based on its past collection experience, Ace Company provides for bad debts at the rate of 2 percent of net credit sales. On January 1, 2014, the
allowance for doubtful accounts credit balance was P10,000. During 2014, Ace wrote off P18,000 of uncollectible receivables and recovered P5,000
on accounts written off in prior years. If net credit sales for 2014 totaled P1,000,000, the doubtful accounts expense for 2014 should be 20,000

FOR THE NEXT 3 REQUIREMENTS: From inception of operations to June 30, 2015, Pascal Ltd provided for uncollectible accounts receivable under the
allowance method – provisions were made monthly at 2% of credit sales; bad debts written off were charged to the allowance account; recoveries of bad
debts previously written off were credited to the allowance account; and no year-end adjustments to the allowance account were made. Pascal’s usual
credit terms are net 30 days.

The balance in the allowance for doubtful debts account was P154,000 at July 1, 2014. During 2014-15, credit sales totalled P9,000,000, interim provisions
for doubtful debts were made at 2% of credit sales, P95,000 of bad debts were written off, and recoveries of accounts previously written off amounted to
P15,000. Pascal installed a computer in May 2015, and an aging of accounts receivable was prepared for the first time as of June 30, 2015. The summary
of aging is as follows:
Classification Balance/ category Estimated doubtful
May – June 15 1,080,000 2%
Jan – April 15 650,000 10%
July – Dec 15 420,000 25%
Before July 2014 150,000 70%
Based on the review of collectability of the account balances in the “before July 2014” aging category, additional receivables totalling P60,000 were written
off as of June 30, 2015. The 70% uncollectable estimate applies to the remaining P90,000 in the category. Effective with the year ended June 30, 2015,
Pascal adopted a new accounting method for estimating the allowance for doubtful debts at the amount indicated by the year – end aging analysis of
account receivable.

9 How much is the bad debts expense for 2015? 240,600

10 Determine the balance of the allowance account as of June 2015. 254,600
11 Determine the net realizable value of accounts receivable as of June 2015. 1,985,400

12 On November 30, 2015, accounts receivable in the amount of P900,000 were assigned to ABC Finance Co. by XYZ as security for a loan of P750,000.
ABC charged a 3% commission on the accounts; the interest rate on the note is 12%. During the December 2015, XYZ collected P350,000 on
assigned accounts after deducting P560 of discounts. XYZ wrote off a P530 assigned account. On December 31, 2015, XYZ remitted to ABC the
amount collected plus one month's interest on the note. How much is XYZ’s equity in the assigned accounts receivable as of December 31, 2015?
P148,910

13 On December 1, 2015, ABC Company assigned P 400,000 of accounts receivable to DEF Company as a security for a loan of P 335,000. ABC
Company charged a 2% commission on the amount of loan; the interest rate on the note was 10%. During December, ABC collected P 110,000 on
assigned accounts after deducting P 380 of discounts. ABC accepted returns worth P 1,350 and wrote off assigned accounts totalling P 2,980.What
is the carrying value of the accounts receivable assigned as of December 31, 2015? 285,290

14 ABC Corp. factored P400,000 of accounts receivable to XYZ Corp. on July 1, 2015. Control was surrendered by ABC. XYZ accepted the receivables
subject to recourse for nonpayment. XYZ assessed a fee of 2% and retains a holdback equal to 5% of the accounts receivable. In addition, XYZ
charged 15% interest computed on a weighted-average time to maturity of the receivables of forty-one days. The fair value of the recourse obligation
is P12,000. ABC will receive and record cash of P365,260

15 ABC Corp. factored P750,000 of accounts receivable to XYZ Company on December 3, 2015. Control was surrendered by ABC. XYZ accepted the
receivables subject to recourse for nonpayment. XYZ assessed a fee of 2% and retains a holdback equal to 4% of the accounts receivable. In
addition, XYZ charged 12% interest computed on a weighted-average time to maturity of the receivables of fifty-one days. The fair value of the
recourse obligation is P15,000. Assuming all receivables are collected, ABC’s cost of factoring the receivables would be P27,575

16 On January 1, 2015, ABC Company received a note form a customer in exchange for merchandise sold. The note is for P5,000,000 with interest
rate of 12% and due on June 30, 2015. On March 1, 2015, ABC Company discounted the note at 15% with a bank to generate cash. What amount
should be recognized as loss on discounting of note receivable by the bank? 65,000

17 On July 1, 2015, ABCD Company sold merchandise to XYZ Company for P1,500,000. ABCD receives P500,000 cash and P1,000,000 interest
bearing promissory note. The note bears 14% and will become due after 120 days. The note was discounted on August 20, 2015 with a bank with
recourse and accounted for as a secured borrowing, at 18%. Assume 360 – day a year. Determine the proceeds from discounting. 1,010,033

18 ABCD Company accepted from a customer a P230,000, 180-day, 10% interest bearing note dated September 30, 2015. On October 31, 2015, ABCD
discounted the note with recourse at BPI at 14%. However, the proceeds were not received but directly credited to its checking account as instructed
by ABCD. The discounting with recourse is accounted for as a conditional sale. Assume 360 – day a year. If any, determine the loss on note receivable
discounting 4,475

FOR THE NEXT 2 REQUIREMENTS: On July 1, 2015, Provo Mercantile Company assigns receivables totaling P300,000 to Salem Bank for a P200,000,
12% note. Provo Mercantile Company does not notify its account debtors and will continue to collect the assigned receivables. Salem assesses a 1%
finance charge on assigned receivables in addition to the interest on the note. Provo is to make monthly payments to Salem wi th cash collected on
assigned receivables. Collections of assigned accounts during July, P180,000 less cash discounts of P1,000 were made, sales returns on July , P2,000
(related to assigned accounts). Before July ends, Provo paid Salem amounts owed for July collections plus monthly interest.
19 How much cash was received by Provo from assigning its specific accounts receivable? 197,000
20 What is the amount of equity on assigned accounts assume that immediately after the first payment, Provo will prepare financial reports. 97,000