PROBLEM #1

Solution:
2019 2018
Account Receivable 4,725,000 4,320,000
Net realizable value 4,590,000 4,252,500
AFDA end 135,000 67,500

Allowance beginning 67,500

Write Off 144,000
Recovery 36,000
Doubtful Account expense 175,500
AFDA end 2019 135,000
0
Entries:

AFDA 144,000
AR 144,000

AR 36,000
AFDA 36,000

PROBLEM #2

Accounts Receivale, Jan. 1 1,950,000

Credit Sales 8,250,000
Total 10,200,000
Less:
Sales Return -225,000
Account writtn off -150,000
Collection from customers -7,500,000 -7,875,000
Account receivable, Dec. 31 2,325,000
Less:
Allowance for Sales return -75,000
AFDA -375,000 -450,000
NRV of AR on December 31 1,875,000

PROBLEM #3

Solution:

i.            Percentage of sales – estimate is 3%

 Sales
Percentage of Sales

a) Prepare adjusting entry for doubtful accounts

Doubtful Account Expense 384,000

AFDA 384,000

b) Compute for doubtful accounts expense for the year

Sales 12,800,000
Percentage of Sales 3%
384,000
c) Compute for the net realizable value (NRV) of A/R

Accounts Receivable
Allowance for doubtful accounts - Jan. 1 160,000
Accounts written off -208,000
Recovery of accounts previously written off 32,000
Doutful Account Expense 384,000
Allowance for doubtful accounts - Dec. 31

ii.            Percentage of accounts receivable – estimate is

Accounts Receivable
Percentage of AR
Required Allowance

a) Prepare adjusting entry for doubtful accounts

Doubtful Account Expense 272,000

AFDA 272,000

Allowance for doubtful accounts - Jan. 1 160,000

Accounts written off -208,000
Recovery of accounts previously written off 32,000
Doutful Account Expense 272,000
Required Allowance 256,000

c) Compute for the net realizable value (NRV) of A/R

Accounts Receivable
Allowance for doubtful accounts - Jan. 1 160,000
Accounts written off -208,000
Recovery of accounts previously written off 32,000
Doutful Account Expense 272,000
Allowance for doubtful accounts - Dec. 31
NRV of AR on Dec. 31

iii.            Aging of accounts receivable – estimate is P32

a) Prepare adjusting entry for doubtful accounts

Doubtful Account Expense 336,000

AFDA 336,000

b) Compute for doubtful accounts expense for the year

Allowance for doubtful accounts - Jan. 1 160,000

Accounts written off -208,000
Recovery of accounts previously written off 32,000
Doutful Account Expense 336,000
Required Allowance 320,000

c) Compute for the net realizable value (NRV) of A/R

Accounts Receivable
Allowance for doubtful accounts - Jan. 1 160,000
Accounts written off -208,000
Recovery of accounts previously written off 32,000
Doutful Account Expense 336,000
Allowance for doubtful accounts - Dec. 31
NRV of AR on Dec. 31

PROBLEM #4

a) How much is the accounts receivable as of December 31, 2019?

Accounts receivable, Jan. 1 500,000

Sales on account, 2/30, n/30 3,500,000
Collections from customers within the discount period -1,225,000
Collections from customers beyond the discount period -1,950,000
Accounts receivable written as worthless -15,000
Recovery of accounts previously written ff not included 5,000
Credit memo for sales return -35,000
Accounts receivable Dec. 31 780,000
b) Prepare the adjusting entry for doubtful accounts on December 31, 2019 if the entity uses the percentage of accoun

Question: What is the Percentage rate to be used? Not given

Allowance for doubtful accounts divide Accounts receivable

20,000 500,000

Accounts receivable 780,000

4%
31,200

Allowance for doubtful accounts - Jan. 1 20,000

Accounts written off -15,000
Recovery of accounts previously written off 5,000
Doubtful Account Expense 21,200
Required Allowance 31,200

Doubtful Account Expense 21,200

AFDA 21,200

c) What is the net realizable value of accounts receivable on December 31, 2019?

Accounts receivable, Dec. 31 780,000

AFDA Dec. 31 31,200
NVR of AE on Dec. 31 748,800

PROBLEM #5

Solution:

Sales (all on credit) 11,400

Sales discount -1,200,000
Sales returns and allowances -600,000
Net sales 9,600,000
5%
Doubtful Account Expense 480,000

Allowance for doubtful accounts - Jan. 1 240,000

Accounts written off as uncollectible -120,000
Recovery of accounts written of 60,000
Doubtful Account Expense 480,000
Allowance for doubtful accounts on Dec. 31 660,000
PROBLEM #6

Solution:

a) Accounts receivable aging schedule, as of 12/31/19.

Chocolatey Company
Aging Schedule

1%
Customer Balance as of Dec. 2019 0 - 30 days

Hersheys 35,180 14,000

Meiji 20,920
Snickers 30,600 20,000
Kitkat 31,600 31,600
Ferrero 17,400
Goya 45,140
Total 180,840 65,600

b) Computation of required allowance for 2019 (Show ALL necessary amounts.)

Summary of Computation of Aging Schedule

Age of Accounts Amount Rate

0 - 30 days 65,600 1.00%

31 - 6- days 44,320 1.50%
61 - 90 days 32,600 3.00%
91 - 120 days 29,400 10.00%
Over 120 days 8,920 50.00%
Total 180,840

c) Journal entry to adjust the allowance account (when necessary)

Allowance for doubtful accounts – December 31 unadjusted -5,500

Doubtful Account Expense 15,198.80
Required Allowance 9,698.80

Doubtful Account Expense 15, 198.80

AFDA 15, 198.80

d) Net realizable value of the company’s accounts receivable as of December 31, 2019.
AR December 31 180,840
AFDA December 31 9,698.80
NRV of AR on December 31 171,140.20
 12,800,000
3%
384,000

3,200,000

368,000
2,832,000

eceivable – estimate is 8%

3,200,000
8%
256,000

3,200,000
 256,000
2,944,000

able – estimate is P320,000

3,200,000

320,000
2,880,000
percentage of accounts receivable method consistently.

4%
 1.50% 3% 10% 50%
31 - 60 days 61 - 90 days 91 - 120 days over 120 days

21,180
12,000 8,920
10,600

17,400
23,140 22,000
65,600 32,600 29,400 8,920

Required Allowance

656
664.8
978
2,940
4,460
9,698