RECEIVABLES

You are auditing the Accounts Receivable of LOPEZ Inc. as of December 31, 2018. You found the following
information in the general journal:
Accounts Receivable P1,466,720
Less: AFDA (46,720)
Accounts Receivable, net P1,420,000

The accounts receivable subsidiary ledger had the following details:

Customers Invoice date Amount Balance
Escorido 09/12/18 139,200 139,200
Alamada 12/12/18 153,600
12/02/18 99,200 252,800
Dulay 11/17/18 185,120
10/08/18 176,000 361,120
Ello 12/08/18 160,000
10/25/18 44,800
08/20/18 40,000 244,800
Sampan 09/27/18 96,000 96,000
Sangid 08/20/18 71,360 71,360
Porcadilla 12/06/18 112,000
11/29/18 169,440 281,440
Total 1,446,720

Additional Info:
a. You discovered based on your review of subsequent events that Sangid recently went bankrupt, thus
you suggested that the amount receivable from the same shall be written off.
b. You also discovered that the invoice dated 12/02/18 has already been settled by Alamada per OR
number 34675. This amount however has been erroneously posted against Dulay’s subsidiary ledger
as a settlement for an invoice dated 11/05/18 for the same amount.
c. The estimated bad debt rates below are based on the company’s receivable collection experience:
Age of accounts % of collectability
0-30 days 98%
31-60 days 95%
61-90 days 90%
91-120 days 80%
Over 120 days 50%
Requirements:
1. If there were no other entries to the allowance for doubtful accounts, what is the correct bad debt expense
for the year?
2. What is the correct allowance for bad debt expense for the year ended December 31, 2018?
3. What is the net adjustment to the Accounts Receivable in the general ledger?
4. What is the carrying value of the company’s accounts receivable as of December 31, 2018?
5. What is the necessary adjusting entry to adjust any unallocated difference between Subsidiary Ledger and
General Ledger?