An analysis of the accounts receivable of Grammar Inc.

shows the following information:

Allowance for Doubtful

Age Balance Collectible (%) Accounts Ratio
Current 3,500,000.00 99.5 0.005
1 to 30 days past due 2,000,000.00 98 0.02
31 to 60 days past due 1,200,000.00 85 0.05
61 to 90 days past due 1,000,000.00 92 0.08
91 to 120 days past due 800,000.00 85 0.15
121 to 180 days past due 400,000.00 70 0.3
181 to 360 days past due 200,000.00 50 0.5
More than 360 days past due 100,000.00 0 0.9
9,200,000.00

Before any adjustments were made, Grammar’s allowance for doubtful accounts had a balance of ₱80,000. 
a. Determine the required balance of Grammar’s doubtful accounts at the end of the reporting period.
b. Determine the doubtful accounts expense Grammar should recognize during the period.
c. Determine the net realizable value of Grammar’s accounts receivable at the end of the period.

Allowance, ending 627,500.00

Allowance, beginning - 80,000.00
Doubtful accounts expense 547,500.00

Accounts Receivable 9,200,000.00

Allowance for Doubtful Accounts - 627,500.00
Net Realizable Value 8,572,500.00
 Bad Debts Expense
17,500.00
40,000.00
60,000.00
80,000.00
120,000.00
120,000.00
100,000.00
90,000.00
627,500.00

₱80,000. 
eporting period.
Coachella Co. prepared the following analysis of its accounts receivable on December 31, 2020

Number of days past due Amount

0-30 5,000,000.00
31-60 3,500,000.00
61-90 1,000,000.00
91-180 500,000.00
Over 180 100,000.00

Coachella Co.'s experience on the uncollectibility of its accounts receivables for the last five years are summarize below:
Uncollectible on days overdue (%)
Year End of year balance 0-30 31-60 61-90
2019 9,700,000.00 3 8 18
2018 9,300,000.00 2 9 19
2017 8,800,000.00 4 10 21
2016 8,200,000.00 4 7 17
2015 7,500,000.00 2 6 15
0.03 0.08 0.18
Before any adjustments were made, the balance of the allowance for doubtful accounts
was Php 175,000. Coachella Co. determines the balance of the allowance for doubtful accounts
at the average percentage of the losses for the last five years. The entity writes off receivables
if they are determined to be totally worthless
a. Compute for the adjusted balance of Coachella Co.'s allowance for doubtful accounts on Decem
b. Compute for the doubtful accounts expense that Coachella Co. should recognize in 2020
c. Determine the net realizable value of Coachella Co.'s accounts receivable on December 31, 202

0-30 31-60 61-90 91-180 Over 180

Accounts Receivable 5,000,000.00 3,500,000.00 1,000,000.00 500,000.00 100,000.00
Initial Doubtful Accounts
Doubtful Accounts Expense 150,000.00 280,000.00 180,000.00 250,000.00 79,000.00
Allowance for Doubtful
Accounts
Net Realizable Value
are summarize below:
on days overdue (%)
91-180 Over 180
48 79
52 72
46 85
54 81
50 78
0.5 0.79

r doubtful accounts on December 31, 2020

ould recognize in 2020
eivable on December 31, 2020

Total
10,100,000.00
175,000.00
939,000.00

764,000.00
9,161,000.00
2020
The adjusted trial of Thomas Company as of December 31, 2019 shows the following:

Account Name Debit Credit

Accounts receivable 1,000,000.00
Allowance for doubtful accounts 40,000.00

Additional information:
a. Cash sales of the company represent 10% of the gross sales. Total sales amounted to Php 12,000,000
b. Ninety percent of the customers did not take advantage of the 2/10 n/30 credit sale terms. The total
face value of the accounts receivable collected during the year was Php 8,360,000
c. Sales returns in 2020 amounted to Php 400,000. All returns were from charge sales
d. During 2020, accounts totaling Php 40,000 were written off as uncollectible; bad debt recoveries during
the year amounted to Php 3,000
e. The allowance for doubtful accounts is measured as follows:

Percentage of ending balance Percent uncollectible

60 2
20 20
12 40
5 60
3 90

Based on the information given, provide the following:

a. Accounts receivable balance as of December 31, 2020
b. Allowance for doubtful accounts, December 31, 2020
c. Net realizable value, December 31, 2020
d. Doubtful accounts expense for 2020

a. Cash 1,200,000.00
Accounts Receivable 10,800,000.00
Sales 12,000,000.00

b Cash 8,343,280.00
Sales Discount 16,720.00
Accounts Receivable 8,360,000.00

c Sales Returns 400,000.00

Accounts Receivable 400,000.00

d Allowance for Doubtful Accounts 40,000.00

Accounts Receivable 40,000.00

Cash 3,000.00
Other Income 3,000.00

e. Percentage of ending balance Uncollectible Percent Amount

60 1,800,000 2% 36,000.00
20 600,000 20% 120,000.00
12 360,000 40% 144,000.00
5 150,000 60% 90,000.00
3 90,000 90% 81,000.00
3,000,000 471,000.00

Account Name Debit Credit

Doubtful Account Expense 471,000.00
Allowance for Doubtful Accounts 471,000.00

a. Accounts Receivable Balance c. Net realizable value

Beginning Balance 1,000,000.00
Sales 10,800,000.00
Collections - 8,360,000.00
Returns - 400,000.00
Write-off - 40,000.00 d. Doubtful accounts expe
Ending Balance, Dec. 31 2020 3,000,000.00

b. Allowance for doubtful accounts

Beginning Balance 40,000.00
Write-off - 40,000.00
Provision for the year 471,000.00
Ending Balance, Dec. 31 2020 471,000.00
000,000
he total

ies during

A/R Discount Cash

8,360,000.00 0.9 7,524,000.00 0 7,524,000.00
8,360,000.00 0.1 836,000.00 16,720.00 819,280.00
8,360,000.00 16,720.00 8,343,280.00

60% 20% 12% 5% 3%

Beginning 1,000,000.00
a. 10,800,000.00
b. - 8,360,000.00
c. - 400,000.00
d. - 40,000.00
Ending 3,000,000.00 1,800,000.00 600,000.00 360,000.00 150,000.00 90,000.00
Allowance Rate 2% 20% 40% 60% 90%
Bad Debts Expense 471,000.00 36,000.00 120,000.00 144,000.00 90,000.00 81,000.00
c. Net realizable value
Accounts Receivable Balance 3,000,000.00
Allowance for doubtful accounts 471,000.00
Net realizable value, Dec. 31 2020 2,529,000.00

d. Doubtful accounts expense

Doubtful accounts expense 471,000.00
On January 1, 2020, James Co. received a 10%, five-year note from a customer. Interest
is paid every December 31. The note has a face value of Php 12,000,000. The effective
rate on the date of the receipt of the note was 12%.
a. Determine the initial amount of the note
b. Prepare an amortization table to show the balance of the note at the end
of each reporting period from 2020 to 2024
c. Compute for the interest income recognized by James during each period
from 2020 to 2024

PV - Principal 6,809,122.27
PV - Interest 4,325,731.44
Total PV 11,134,853.71
Face Value 12,000,000
Discount 865,146.29

Discount
Date Interest Earned Cash Received Amortization Carrying Amount
Jan. 1, 2020 11,134,853.71
Dec. 31, 2020 1,336,182.45 1,200,000.00 136,182.45 11,271,036.15
Dec. 31, 2021 1,352,524.34 1,200,000.00 152,524.34 11,423,560.49
Dec. 31, 2022 1,370,827.26 1,200,000.00 170,827.26 11,594,387.75
Dec. 31, 2023 1,391,326.53 1,200,000.00 191,326.53 11,785,714.28
Dec. 31, 2024 1,414,285.71 1,200,000.00 214,285.71 12,000,000.00

Face amount of note receivable 12,000,000.00

Discount on note receivable - 865,146.29
Carrying amount 11,134,853.70
On January 1, 2020, Frank Co. received a 14%, three-year note from a customer. Interest
is paid every June 30 and December 31. The note has a face value of Php 1,000,000. The effective
rate on the date of the receipt of the note was 12%.
a. Determine the initial amount of the note
b. Prepare an amortization table to show the balance of the note at the end
of each reporting period from 2020 to 2022
c. Compute for the interest income recognized by Frank during each period
from 2020 to 2022

PV - Principal 506,631.12
PV - Interest 575,597.03
Total PV 1,082,228.15
Face Value 1,000,000
Premium - 82,228.15

Premium
Date Interest Earned Cash Received Amortization Carrying Amount
Jan. 1, 2020 1,082,228.15
Jun. 6, 2020 129,867.38 140,000.00 - 10,132.62 1,072,095.53
Dec. 31, 2020 128,651.46 140,000.00 - 11,348.54 1,060,746.99
Jun. 6, 2021 127,289.64 140,000.00 - 12,710.36 1,048,036.63
Dec. 31, 2021 125,764.40 140,000.00 - 14,235.60 1,033,801.03
Jun. 6, 2022 124,056.12 140,000.00 - 15,943.88 1,017,857.15
Dec. 31, 2022 122,142.86 140,000.00 - 17,857.14 1,000,000.01

Face amount of note receivable 1,000,000.00

Premium on note receivable - 82,228.15
Carrying amount 1,082,228.15
ve
The accounts receivable balance of Skinner Co. on December 31, 2019 was Php 1,200,000.
Pertinent data regarding the company's credit sales and accounts receivable in 2020 and 2021
are as follows;

Account Name 2019 2020 2021

Accounts receivable, December 31 1,200,000.00 1,300,000.00 1,700,000.00
Credit sales - 22,500,000.00 21,600,000.00
Accounts receivable turnover 18.00 33.23
Average collection period 20.28 11.59

a. Compute for the accounts receivable turnover in 2020 and 2021

b. Compute for the average collection period in 2020 and 2021
21

Average AR
1,250,000.00
650,000.00