INES, Shaina Marie S.

February 23, 2021

BSA – II Intermediate Accounting

PROBLEMS 5-6

PROBLEM 5: TOTAL CURRENT RECEIVABLES

ACTIVITY #1: TOTAL CURRENT RECEIVABLES

Solutions:

Requirement (a): Adjusted accounts receivable

Unadjusted accounts receivable 10,537,089

Credit balance (DEF Co.) 341,236
Sales Order #21022394 20,000
Adjusted accounts receivable 10,898,325

Requirement (b): Total current receivables

Adjusted accounts receivable 10,898,325

Notes receivable (3-month) 35,000
Dividends receivable (10,000 sh. x ₱5) 50,000
Total Current receivables 10,983,325

Requirement (c): Adjusting entries

Accounts receivable 341,236
Advances from customers 341,236
To eliminate the credit balance in DEF Co.’s account

Accounts receivable 20,000

Sales 20,000
To record the unrecorded sales

Notes receivable 35,000

Cash 35,000
To record the loan to Mr. Wilson

Dividends receivable 50,000

Dividend income 50,000
To accrued the dividends

ACTIVITY #2: JOURNAL ENTRIES

Solutions:
Requirement (a): Journal entries

1) Accounts receivable 20,000

Sales 20,000
To record SI#001101

2)
a. Accounts receivable 3,000
Allowance for bad debts 3,000
 To reverse the previous write-off

Cash 3,000
Accounts receivable 3,000
To record the collection of accounts receivable

b. Cash 25,000
Accounts receivable 25,000
To record the collection of accounts receivable

c. Accounts receivable 19,000

Cash 19,000
To record the NSF check

3) Bad debts expense 22,415*

Allowance for bad debts 22,415
To accrue bad debts for the year

*Unadjusted credit sales 2,221,488

Add: SI#001101 20,000
Adjusted credit sales 2,241,488
Multiply by: 1%
Bad debts expense - 20x1 22,415

4) Allowance for bad debts (7K + 2K) 9,000

Accounts receivable 9,000
To record the write-off of accounts

Requirement (b): Adjusted balances of A/R & Allowance

Accounts receivable
Unadjusted 480,000
(1) 20,000
(2a) 3,000 3,000
25,000 (2b)
(2c) 19,000 9,000 (4)
485,000 Adjusted

Allowance for bad debts

12,000 Unadjusted
3,000 (2a)
22,415 (3)
(4) 9,000  
 
Adjusted 28,415  

Requirement (c): Carrying amount of accounts receivable

Accounts receivable 485,000

Allowance for bad debts (28,415)
 Carrying amount 456,585

ACTIVITY #3: DEBTS EXPENSE

Solutions:

Requirement (a):
BDE - 20x2: (9,824,000 x 80% x 2.5%) = 196,480
BDE - 20x1: (2,670,000 x 80% x 2.5%) = 53,400

Requirement (b):

Allowance for bad debts

41,800 12.31.x1 (836K x 5%)
Write-offs 115,000 196,000 BDE - 20x2 (squeeze)
12.31.x2 (2.456M x 5%) 122,800

Allowance for bad debts

- 3.7.x1
Write-offs 12,000 53,800 BDE - 20x1 (squeeze)
12.31.x1 (836K x 5%) 41,800

ACTIVITY #4: AGING (PROVISION MATRIX)

Cut-off DATE: 31-12-2018

Invoice # Invoice date Amount Due Date # of days past due Not past due 1-30 days 31-60 days 61-90 days Over 90 days
001 August 14, 2018 10,000.00 September 13, 2018 109 10,000.00
002 September 2, 2018 45,000.00 October 2, 2018 90 45,000.00
003 September 21, 2018 29,000.00 October 21, 2018 71 29,000.00
004 September 24, 2018 16,000.00 October 24, 2018 68 16,000.00
005 October 5, 2018 375,000.00 November 4, 2018 57 375,000.00
006 October 10, 2018 125,000.00 November 9, 2018 52 125,000.00
007 October 20, 2018 6,000.00 November 19, 2018 42 6,000.00
008 November 2, 2018 28,000.00 December 2, 2018 29 28,000.00
009 November 16, 2018 9,000.00 December 16, 2018 15 9,000.00
010 December 9, 2018 445,000.00 January 8, 2019 0 445,000.00
1,088,000.00 445000 37000 506000 90000 10,000.00 1088000

Accounts that are over due 1-30 days 97%

Accounts that are over due 31-60 days 90%
Accounts that are over due 61-90 days 85%
Accounts that are over due for over 90 days 65%
Allowance for Bad Debts 68, 710.00