CPA REVIEW SCHOOL OF THE PHILIPPINES

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FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/ESCALA/SANTOS/DELA CRUZ

ACCOUNTS RECEIVABLE
1. An entity provided the following information for the current year:
Accounts receivable – January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding recovery of accounts written off 7,500,000
Accounts written off as worthless 100,000
Sales returns 400,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 300,000
Estimated uncollectible accounts on December 31 per aging 600,000
What is the “amortized cost” of accounts receivable on December 31?
a. 4,000,000
b. 3,700,000
c. 3,450,000
d. 3,100,000
2. An entity prepared an aging of accounts receivable on December 31 and determined that the net
realizable value of the accounts receivable was P2,500,000.
Allowance for doubtful accounts on January 1 300,000
Accounts written off as uncollectible 200,000
Accounts receivable on December 31 2,900,000
Uncollectible accounts recovery 50,000
What amount should be recognized as doubtful accounts expense for the current year?
a. 350,000
b. 200,000
c. 150,000
d. 250,000
3. An entity provided the following data for the current year:
\

Allowance for doubtful accounts January 1 180,000

Sales 9,500,000
Sales returns and allowances 800,000
Sales discount 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful accounts expense at the rate of 5% of net sales. What amount should
be reported as doubtful accounts expense for the current year?
a. 435,000
b. 425,000
c. 475,000
d. 415,000
4. Effective with the current year, an entity adopted a new accounting method for estimating the
allowance for doubtful accounts at the amount indicated by the year-end aging of accounts
receivable.
Allowance for doubtful accounts, January 1 250,000
Provision for doubtful accounts during the current year at 2% of credit sales of
P10,000,000 200,000
Accounts written off 205,000
Estimated uncollectible accounts per aging on December 31 220,000
What amount should be reported as doubtful accounts expense for current year?
a. 220,000
b. 205,000
c. 200,000
d. 175,000
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5. An entity provided the following accounts abstracted from the unadjusted trial balance at year-end:
Debit Credit
Accounts receivable 5,000,000
Allowance for doubtful accounts 100,000
Net credit sales 20,000,000
The entity estimated that 10% of the gross accounts receivable will become uncollectible.
What amount should be recognized as doubtful accounts expense for the current year?
a. 500,000
b. 400,000
c. 200,000
d. 600,000

6. From inception of operations, an entity provided for doubtful accounts under the allowance method
and provisions were made monthly at 2% of credit sales.
No year-end adjustments to the allowance account were made. The balance in the allowance for
doubtful accounts was P1,000,000 on January 1, 2021.
During 2021, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at
2% of credit sales, P200,000 of bad debts were written off, and recoveries of accounts previously
written off amounted to P50,000. An aging was made on December 31, 2021.
Classification Balance Uncollectible
November - December 6,000,000 10%
July - October 2,000,000 20%
January - June 1,500,000 30%
Prior to January 1, 2021 500,000 50%
Based on the review of collectibility of the account balances in the “prior to January 1, 2021” aging
category, additional accounts totaling P100,000 are to be written off on December 31, 2021. Effective
December 31, 2021, the entity adopted aging method for estimating the allowance for doubtful
accounts.

1. What is the required allowance for doubtful accounts on December 31, 2021?
a. 1,650,000
b. 1,950,000
c. 1,700,000
d. 1,450,000

2. What amount should be reported as doubtful accounts expense for current year?
a. 1,200,000
b. 1,650,000
c. 900,000
d. 950,000

3. What is the adjustment to the allowance for doubtful accounts on December 31, 2021?
a. 900,000 debit
b. 900,000 credit
c. 500,000 debit
d. 500,000 credit

4. What is the net realizable value of accounts receivable on December 31, 2021?
a. 9,900,000
b. 8,250,000
c. 8,350,000
d. 8,200,000
END
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