Shelt Company has the following account balances at

year-end:
          Accounts receivable                            P80,000
          Allowance for doubtful accounts         4,800
           Sales discounts                                       3,200
Shelt should report accounts receivable at a net
amount of
The correct answer is:
P75,200

During the second year of operations, Fauna Company found itself in

financial difficulties.  The entity decided to use accounts receivable as
a means of obtaining cash to continue operations.
On July 1, 2020, Fauna sold P1,500,000 of accounts receivable for
cash proceeds of P1,390,000. No bad debts allowance was associated
with these accounts.
On December 15, 2020, Fauna assigned the remainder of the accounts
receivable, P5,000,000 as collateral on a P2,500,000, 12% annual
interest rate loan. It received P2,500,000 less a 2% finance charge. 
None of the assigned accounts had been collected by the end of the
year. Below is additional information:
  Allowance for bad debts before adjustment, 12/31/2020 100,000

  Estimated uncollectible,12/31/2020 10% of accounts receivable

  Accounts receivable, not including factored and assigned 1,000,000

accounts, 12/31/2020

  Accounts receivable, assigned 5,000,000

  Accounts receivable, factored 1,500,000

Required:  Answer the following questions:

1.    What is the total amount of cash received from the financing of
accounts receivable during the current year? [3,840,000]
2.    What total amount of accounts receivable should be reported as
current assets on December 31,2020? [6,000,000]
3.   What is the bad debt expense for the current year? [500,000]

Wing Corp. has outstanding accounts receivable

totaling P2.54 million as of December 31 and sales on
credit during the year of P12.8 million. There is also a
debit balance of P6,000 in the allowance for doubtful
accounts. If the company estimates that 1% of its net
credit sales will be uncollectible, what will be the
balance in the allowance for doubtful accounts after
the year-end adjustment to record bad debt expense?
The correct answer is:
P122,000

On April 1, 2020, Alyjan Company discounted with recourse a 9-

month, 10% note dated January 1, 2020, with a face amount of
P6,000,000. The bank discount rate is 12%.  The discounting
transaction is accounted for as a conditional sale with recognition of
contingent liability.
On October 1, 2020, the maker dishonored the note receivable. Alyjan
paid the maturity value of the note plus protest fee of P50,000 to the
bank, and charged the whole amount to the maker.
On December 31, 2020, Alyjan collected the dishonored note
receivable in full plus 12% annual interest on the total amount due.
Required:  Solve the problem manually on paper. picture and upload
as part of your requirement.  On every page, write your name, section,
problem number. Answer the following questions:
1. What amount was received from the note receivable discounting on
April 1, 2020? [6,063,000]

2. What amount should be recognized as loss on note receivable

discounting? [87,000]
3. What is the total amount collected from the customer on December
31, 2020? [6,695,000]
4. If the discounting is secured borrowing, what is included in the
journal entry to record the transaction? [Debit Interest Expense,
P87,000]

Ace Inc. made a P10,000 sale on account with the following terms:
1/15, n/30. 
Answer the following questions:
a.  If the company uses the net method to record sales made on credit,
how much should be recorded as sales revenue? [P 9,900]
b.  If the company uses the gross method to record sales made on
credit, what is/are the debit(s) in the journal entry to record the
sale? [Debit Accounts Receivable for P10,000]
c. Credit terms are now: 2/10, n/30. If the company uses the net
method to record sales made on credit , what is/are the debit(s) in the
journal entry to record the sale? [Debit Accounts Receivable for
P9,800]

Etrain Roads sold P50,000 of goods and accepted the customer’s

P50,000 10%
1-year note receivable in exchange. Assuming 10% approximates the
market rate of return, 
a. what would be the debit in this journal entry to record the sale?
[Debit Notes Receivable for P50,000]
b. how much interest would be recorded for the year ending December
31 if the sale was made on June 30? [P2,500]

On February 1, 2020, Henson Company factored receivables with a

carrying amount of P300,000 to Agee Company. Agee Company
assesses a finance charge of 3% of the receivables and retains 5% of the
receivables. Relative to this transaction, you are to determine the
amount of loss on sale to be reported in the income statement of
Henson Company for February.
a. Assume that Henson factors the receivables on a without guarantee
(recourse) basis. The loss to be reported is [P9,000]
b. Assume that Henson factors the receivables on a with guarantee
(recourse) basis. The amount of cash received is [P276,000]

Ding Corp. has outstanding accounts receivable totaling P3 million

as of December 31 and sales on credit during the year of P15 million.
There is also a debit balance of P12,000 in the allowance for
doubtful accounts. If the company estimates that 8% of its
outstanding receivables will be uncollectible, what will be the
balance in the allowance for doubtful accounts after the year-end
adjustment to record bad debt expense?

The correct answer is:

P   240,000
Ming Corp. has outstanding accounts receivable
totaling P6.5 million as of December 31 and sales on
credit during the year of P24 million. There is also a
credit balance of P12,000 in the allowance for
doubtful accounts. If the company estimates that 8%
of its outstanding receivables will be uncollectible,
what will be the amount of bad debt expense
recognized for the year?
The correct answer is:
P   508,000
Lester Company received a seven-year zero-interest-
bearing note on February 22, 2019, in exchange for
property it sold to Peter Company. There was no
established exchange price for this property and the
note has no ready market. The prevailing rate of
interest for a note of this type was 7% on February 22,
2019, 7.5% on December 31, 2019, 7.7% on February
22, 2020, and 8% on December 31, 2020.  What
interest rate should be used to calculate the interest
revenue from this transaction for the years ended
December 31, 2019 and 2020, respectively?
The correct answer is:
7% and 7%
On January 1, 2019, West Co. exchanged equipment
for a P400,000 zero-interest-bearing note due on
January 1, 2022. The prevailing rate of interest for a
note of this type at January 1, 2019 was 10%. The
present value of P1 at 10% for three periods is 0.75.
What amount of interest revenue should be included
in West’s 2020 income statement?
The correct answer is:
P33,000
P400,000 × .75 = P300,000   present value
P300,000 × .10 = P30,000     (2019 interest)
(P300,000 + P30,000) × .10 = P33,000 (2020 interest).

SoldBank loaned P 5,000,000 to a borrower on January 1, 2018.  The

terms of the loan require principal payments of P1,000,000 each year
for 5 years plus interest at 8%. The first principal and interest payment
are due on January 1, 2019.  The borrower made the required
payments during 2019 and 2020. 
However, during 2020, the borrower began to experience financial
difficulties, requiring the bank to reassess the collectibility of the loan.
On December 31, 2020, the bank has determined that the remaining
principal payment will be collected as originally scheduled but he
collection of the interest is unlikely.  The bank did not accrue the
interest on December 31, 2020.
Present value of P1 at 8%
     For one period -  0.926; two periods – 0.857; three periods – 0.794
Required:  Solve the problem manually on paper, picture and upload
as part of your requirement.  On every page, write your name,
section, problem number. Answer the following questions:
1.   What is the impairment loss for 2020? [217,000]
2.  What is the interest income for 2021? [142,640]
3.  What is the carrying amount of the receivable on December 31,
2021? [1,925,640]

On January 1, 2020, Abe Company sold an equipment with a carrying

amount of P800,000, receiving a non-interest bearing note due in
three years with a face amount of P1,000,000.  There is no established
market value for the equipment.  
The interest rate for similar obligations is 12%.  The present value of 1
at 12% for three periods is 0.712.  
Required:  Solve the problem manually on paper. picture and upload
as part of your requirement.  On every page, write your name,
section, problem number. Answer the following questions:

1. Amount of gain or loss on the sale of equipment in 2020 [88,000

loss]

2. Reported Interest revenue for 2020 [85,440]

3. Carrying value of note receivable on December 31,

2020 [797,440]

4. Reported Interest revenue for 2021 [95,693]

5. Entry in 2020 will include a [Debit to Notes receivable]

6. Classification of Notes Receivable in the Statement of Financial

Position  in 2020 [Noncurrent asset]
Before year-end adjusting entries, Dunn Company’s
account balances at December 31, 2020, for accounts
receivable and the related allowance for uncollectible
accounts were P600,000 and P45,000, respectively.
An aging of accounts receivable indicated that
P62,500 of the December 31 receivables are expected
to be uncollectible. The net realizable value of
accounts receivable after adjustment is
The correct answer is:
P537,500
Sun Inc assigns P2,000,000 of its accounts receivables as collateral
for a P1 million 8% loan with a bank. Sun Inc. also pays a finance fee
of 1% on the transaction upfront. What would be recorded as a gain
(loss) on the transfer of receivables?

The correct answer is:

P0
Lion Company has the following account balances at year-end:
             Accounts receivable - P 60,000; Allowance for doubtful
accounts -  3,600; Sales discounts -         2,400
Lion should report accounts receivable at a net amount of

The correct answer is:

P 56,400.
Sun Inc. factors P2,000,000 of its accounts receivables with
guarantee (recourse) for a finance charge of 3%. The finance
company retains an amount equal to 10% of the accounts receivable
for possible adjustments. What would be recorded as a gain (loss)
on the transfer of receivables?

The correct answer is: P0

At the close of its first year of operations, December 31, 2020, Sing
Company had accounts receivable of P540,000, after deducting the
related allowance for doubtful accounts. During 2020, the company
had charges to bad debt expense of P90,000 and wrote off, as
uncollectible, accounts receivable of P40,000. What should the
company report on its statement of financial position at December
31, 2020, as accounts receivable before the allowance for doubtful
accounts?

The correct answer is:

P590,000
Sun Inc. factors P2,000,000 of its accounts
receivables without guarantee (recourse) for a finance
charge of 5%. The finance company retains an amount
equal to 10% of the accounts receivable for possible
adjustments. What would be recorded by Sun as a
gain (loss) on the transfer of receivables?
The correct answer is:
Loss of P100,000