PROBLEM 5-1

a. Doubtful Accounts ₱75,000

Allowance for Doubtful Accounts ₱75,000

Sales ₱5,000,000
Multiply: 75%
Total ₱3,750,000
Multiply: 2%
Total ₱75,000

b. Doubtful Accounts (5,000,000 x 1%) ₱50,000

Allowance for Doubtful Accounts 50,000

c. Doubtful Accounts ₱60,000

Allowance for Doubtful Accounts ₱60,000

Required allowance ₱80,000

Less: Allowance for Doubtful Accounts (20,000)
Total ₱60,000

d. Doubtful Accounts ₱30,000

Allowance for Doubtful Accounts ₱30,000

Required allowance ₱50,000

Less: Allowance for Doubtful Accounts (20,000)
Total ₱30,000

PROBLEM 5-2
a. Accounts Receivable ₱7,000,000
Sales ₱7,000,000

Cash ₱2,450,000
Sales Discount 50,000
Accounts Receivable ₱2,500,000

Cash ₱ 3,900,000
Accounts Receivable ₱3,900,000

Allowance for Doubtful Accounts ₱30,000

Accounts Receivable ₱30,000

Cash ₱10,000
Accounts Receivable ₱ 10,000

Sales Returns ₱ 70,000

Accounts Receivable ₱70,000

Doubtful Accounts 40,000

b
.
Allowance for Doubtful Accounts 40,000

Rate: (40,000 / 1,000,000) = 4%

Allowance for Doubtful Accounts - December 31 (4% x 1,500,000) 60,000

Less: Allowance before adjustment (20,000)
Doubtful Accounts Expense 40,000

c. Accounts Receivable - December 31 1,500,000

Allowance for Doubtful Accounts (60,000)
Net Realizable Value 1,440,000

PROBLEM 5-3
a. Cash ₱800,000
Accounts Receivable 7,200,000
Sales ₱8,000,000

Gross Sales (800,000 / 10%) ₱8,000,000

Cash ₱684,000
Sales Discount 36,000
Accounts Receivable ₱720,000
(7,200,000 x 10%)

Cash ₱5,940,000
Accounts Receivable ₱5,940,000

Sales Discount ₱10,000

Allowance for Sales Discount ₱10,000

Sales Returns ₱80,000

Accounts Receivable ₱80,000

Allowance for Doubtful Accounts ₱60,000

Accounts Receivable ₱60,000

Cash ₱10,000
Accounts Receivable ₱10,000

Doubtful Expense ₱70,000

Allowance for Doubtful Accounts ₱70,000

b. Accounts Receivable - Ending ₱2,400,000

Less: Allowance for Doubtful Accounts 120,000
Less: Allowance for Sales Discount 10,000
Net Realizable Value ₱2,530,000
PROBLEM 5-4
a. Cash ₱470,000
Accounts Receivable 2,600,000
Sales ₱3,070,000

Cash ₱1,000,000
Accounts Receivable ₱1,000,000

₱2,455,00
Cash Received from Credit Customers 0
Less: Cash Received from Customers with
Discount 1,455,000
Cash Received from Customer without ₱1,000,00
Discount 0

₱1,4
55,00
Cash 0
45,00
Sales Discount 0
₱1,
Accounts 500,
Receivable 000

Allowance for
Doubtful ₱20,
Accounts 000
Accounts ₱20
Receivable ,000

Sales Return ₱55,

and Allowances 000
Accounts ₱55
Receivable ,000

Sales Return ₱10,

and Allowances 000
₱10
Cash ,000

Accounts ₱5,0
Receivable 00
Allowance for
Doubtful ₱5,
Accounts 000

Cash ₱5,0
00
Accounts ₱5,
Receivable 000

b. Credit Sales ₱2,600,000

Less: Sales Discount -45,000
Less: Sales Returns to Credit Customers -55,000
Net Credit Sales ₱2,500,000
Loss Percentage 2%
Doubtful Accounts Expense ₱50,000
 Doubtful Expense ₱50,000
Allowance for Doubtful Accounts ₱50,000

c. Accounts Receivable, ending

(600,000 + 25,000) ₱625,000
Less: Allowance for Doubtful Accounts -60,000
Net Realizable Value ₱565,000

Allowance for Doubtful Accounts ₱10,000

Doubtful Accounts Expense 50,000
Allowance for Doubtful Accounts, ending ₱60,000

PROBLEM 5-5
a. Accounts Receivable ₱7,935,000
Sales ₱7,935,000

Cash 4,410,000
Sales Discount 90,000
Accounts Receivable 4,500,000

Cash 2,475,000
Sales Discount 25,000
Accounts Receivable 2,500,000

Accounts Receivable 15,000

Allowance for Doubtful Accounts 15,000

Cash 1,100,000
Accounts Receivable 1,100,000

Allowance for Doubtful Accounts 55,000

Accounts Receivable 55,000

Sales Return 30,000

Accounts Receivable 30,000

b. Doubtful Accounts Expense 30,000

Allowance for Doubtful Accounts 30,000

Rate (60,000/1,500,000) = 4%

Required Allowance ₱50,000

((1,500,000 - 250,000) x 4%)
Allowance before adjustments
(60,000 + 15,000 - 55,000) 20,000
Doubtful Accounts Expense ₱30,000

c. Accounts Receivable ₱1,250,000

Allowance for Doubtful Accounts 50,000
Net Realizable Value ₱1,200,000
PROBLEM 5-6
1. Amount Percent Uncollectible Required Allowance
Not yet due ₱1,700,000
1-30 days past due 1,200,000 5% ₱60,000
31-60 days past due 100,000 25% 25,000
61-90 days past due 150,000 50% 75,000
Over 90 days past due 120,000 100% 120,000
₱3,270,000 ₱280,000

2. Required Allowance ₱280,000

Less: Allowance for Doubtful Accounts -170,000
Doubtful Accounts Expense ₱110,000

3. Doubtful Accounts Expense ₱110,000

Allowance for Doubtful Accounts ₱110,000

4. Accounts Receivable 3,270,000

Less: Allowance for Doubtful Accounts -280000
Net Realizable Value 2,990,000

PROBLEM 5-7
Year Credit Sales Accounts written off Recoveries Net
2017 1,500,000 15,000 0 15,000
2018 2,200,000 40,000 2,000 38,000
2019 3,000,000 50,000 3,000 47,000
2020 3,300,000 65,000 5,000 60,000
10,000,000 170,000 10,000 160,000

Net accounts written off (2017 to 2020) 160,000

10,000,0
Divide by credit sales (2017 to 2020) 00
Percentage of uncollectible accounts to charge
sales 1.60%

Allowance for Doubtful Accounts, 1/1/21

(1,250,000 x
1.60%) 20,000

1. Doubtful Expense 20000

Allowance for Doubtful Expense 20000

Year Credit Sales Accounts written off Recoveries Net

2017 1,500,000 15,000 0 15,000
2018 2,200,000 40,000 2,000 38,000
2019 3,000,000 50,000 3,000 47,000
2020 3,300,000 65,000 5,000 60,000
2021 4,000,000 88,000 10,000 78,000
14,000,000 258,000 20000 238,000

Net accounts written off (2017 to 2021) 238,000

Divide by credit sales (2017 to 2021) 14,000,000
Percentage of uncollectible accounts to charge sales 1.70%
Allowance for Doubtful Accounts, 12/31/21
(2,000,000 x 1.70%) 34000

2. Required Allowance, 12/31/21 34000

Accounts Written off in 2021 88,000
Bad debt recoveries in 2021 -10,000
Allowance for Doubtful accounts, 1/1/21 -20000
Doubtful Accounts Expense in 2021 92000

3. Accounts Receivable, 12/31/21 2,000,000

Less: Allowance for Doubtful Accounts, 12/31/21 -34000
Net Realizable Value 1,966,000

PROBLEM 5-8
1. Amount Percentage Collectible Collectible Uncollectible
November to December 5,000,000 95% 4,750,000 250,000
July to October 2,000,000 90% 1,800,000 200,000
January to June 1,000,000 75% 750,000 250,000
Prior to January 1, 2021 500,000 25% 125,000 375,000
8,500,000 7,425,000 1,075,000

2. Allowance for Doubtful Accounts, 1/1/21 500,000

Add: Interim Provisions (20,000,000 x 2%) 400000
Allowance for Doubtful Accounts 900,000
Less: Bad Debts Written Off (300,000 +
100,000) -400000
-
1,075,00
Less: Estimated Uncollectible 0
Required Allowance -575,000

3. Doubtful Expense Account 1,475,000

Allowance for Doubtful Accounts 1,475,000

Bad Debts Written Off 300,000

Add: Additional Written off 100,000
Add: Estimated Uncollectible 1,075,000
Doubtful Expense 1,475,000

PROBLEM 5-9

1. Days Past Invoice Date Percent Uncollectible Amount Uncollectible

0 - 30 1% 250,000 2,500
31 - 90 5% 90,000 4,500
91 - 180 20% 45,000 9,000
Over 180 80% 15,000 12,000
400,000 28,000

Allowance for Doubtful Accounts, 1/1/21 28,000

2. Days Past Invoice Date Percent Uncollectible Amount Uncollectible
0 - 30 1% 300,000 3,000
31 - 90 5% 80,000 4,000
91 - 180 20% 60,000 12,000
Over 180 80% 25,000 20,000
465,000 39,000

Allowance for Doubtful Accounts, 12/31/21 39,000

3. Allowance for Doubtful Accounts, 1/1/21 28,000

Recovery in 2021 7,000
Uncollectible Accounts Expense for 2010
(SQUEEZE) 31,000
Total 66,000
-
Less: Written Off in 2021 27,000
Required Allowance - December 31, 2021 39,000

4. Doubtful Expense Account 31,000

Allowance for Doubtful Accounts 31,000

Required Allowance, 12/31/21 39,000

Add: Additional Written off 27,000
Less: Written Off 2021 -7,000
Less: Allowance for Doubtful Accounts, 1/1/21 -28,000
Doubtful Expense 31,000

PROBLEM 5-10
Allowance for Doubtful Accounts, January 1 280,000
Recovery of Accounts Written Off 50,000
Doubtful Accounts Expense (SQUEEZE) 100,000
Total 430,000
Accounts Written Off -230,000
Allowance - December 31 200,000

PROBLEM 5-11
800,00
The decrease in working capital is 0

PROBLEM 5-12
Allowance for Doubtful Accounts - December 31,
2021 900,000
Add: Doubtful Accounts Expense 250,000
Total 1,150,000
Accounts Written Off (SQUEEZE) 150,000
Allowance for Doubtful Accounts - December 31,
2022 1,000,000

PROBLEM 5-13
Allowance for Doubtful Accounts, January 1 200,000
Less: Accounts Receivable deemed Worthless and -
Written Off 300,000
-
Less: Allowance for Doubtful Accounts, December 31 400,000
Doubtful Accounts Expense -
 500,000

PROBLEM 5-14
Days Outstanding Estimated Amount 5 Uncollectible Amount
0 - 60 1,200,000 1% 12,000
61 - 120 900,000 2% 18,000
Over 120 1,000,000 6% 60,000
3,100,000 90,000

Allowance for Doubtful Accounts, January

1 60,000
Uncollectible Accounts Expense 80,000
Recovery of Accounts Written Off 20,000
Total 160,000
Accounts Written Off -70,000
Allowance - December 31 90,000

PROBLEM 5-15
1. Amount 2,000,000
Multiply: 2%
Sales Discount 40,000
Multiply: 50%
Allowance for Sales Discount 20,000

2. Age Amount Collectible Collected Uncollectible

0 - 15 2,000,000 100% 2,000,000 0
16 - 30 1,400,000 95% 1,330,000 70,000
31 - 60 400,000 90% 360,000 40,000
Over 60 200,000 50% 100,000 100,000
4,000,000 3,790,000 210,000

Allowance for Doubtful Accounts 210,000

3. Accounts Receivable 4,000,000

Less: Allowance for Doubtful Accounts -210,000
Less: Allowance for Sales Discount -20,000
Net Realizable Value 3,770,000

PROBLEM 5-16
Accounts Receivable 3,000,000
Multiply: Percentage Uncollectible 3%
Total 90,000
Add: Allowance for Doubtful Accounts 10,000
Doubtful Accounts Expense 100,000

PROBLEM 5-17
Sales 7,200,000
Less: Sales Return -200,000
Total 7,000,000
Multiply: Percentage Uncollectible 2%
Uncollectible Accounts Receivable 140,000

PROBLEM 5-18
 Allowance - January 1 200,000
Doubtful Accounts Expense (8,000,000 x 5%) 400,000
Recovery of Accounts Written Off 50,000
Total 650,000
Accounts Written Off -100,000
Allowance - December 31 550,000

PROBLEM 5-19
Allowance - January 1 250,000
Doubtful Accounts Expense 175,000
Total 425,000
Accounts Written Off -205,000
Allowance - December 31 220,000

PROBLEM 5-20
1. Allowance - January 1 1,000,000
Recovery of Accounts Written Off 50,000
Debit Balance in Allowance 100,000
Allowance - December 31 before adjustment 1,150,000

2. Aging Balance Uncollectible Uncollected

0 - 60 6,000,000 10% 600,000
61 - 180 2,000,000 20% 400,000
181 - 360 1,500,000 30% 450,000
Over 360 400,000 50% 200,000
9,900,000 1,650,000

1,000,00
3. Allowance - January 1 0
Recovery of Accounts Written Off 50,000
Doubtful Accounts Expense 900,000
1,950,00
Total 0
Written Off (200,000 + 100,000) -300,000
1,650,00
Required Allowance - December 31 0

4. Doubtful Accounts Expense 900,000

Less: Recorded Amount (20,000,000 x 2%) 400000
Year-end Adjustment to the Allowance
Account 500,000

9,900,00
5. Accounts Receivable - December 31, 2020 0
-
1,650,00
Allowance for Doubtful Accounts 0
8,250,00
Net Realizable Value 0

PROBLEM 5-21
Recoverie
1. Credit Sales Writeoffs s Net
2018 11,100,000 260,000 22,000 238,000
2019 12,250,000 295,000 37,000 258,000
2020 14,650,000 300,000 36,000 264,000
 38,000,000 855,000 95,000 760,000

Rate = 760,000/38,000,000 = 2%

Doubtful Accounts Expense for 2021

15,000,000 x 2% = 300000

2. Allowance for Doubtful Accounts, January 1, 2021 80,000

Doubtful Accounts Expense for 2021 300000
Recoveries in 2021 40,000
Total 420,000
Written off in 2021 -310,000
Allowance for Doubtful Accounts, Dec. 31, 2021 110,000

3. Accounts Receivable, January 1, 2021 2,070,000

Credit Sales in 2021 15,000,000
Collection from Customers in 2021 -14,000,000
Written off in 2021 -310,000
Accounts Receivable, December 31, 2021 2,760,000

PROBLEM 5-22
1. Probability of
Days Account Outstanding Amount Collection Collected Uncollectible
30 days or less 3,000,000 95% 2,850,000 150,000
Between 31 and 60 days 1,500,000 80% 1,200,000 300,000
Between 61 and 180 days 1,200,000 75% 900,000 300,000
Betweem 181 and one year 1,200,000 50% 600,000 600,000
Over one year - to be written
off 100,000 0% 0 100,000
7,000,000 5,550,000 1,450,000

2. Required Allowance, 12/31/21 1,450,000

Less: Written Off 2021 -100,000
Less: Allowance for Doubtful Accounts,
1/1/21 -750,000
Doubtful Expense 600,000

3. Accounts Receivable - December 31, 2020 7,000,000

-
Allowance for Doubtful Accounts 1,450,000
Net Realizable Value 5,550,000

PROBLEM 5-23
1. Allowance for Doubtful Accounts - Beginning -15,000
Bad Debts -30,000
Write Off 35,000
Allowance for Doubtful Accounts - Ending -10,000

2. Accounts Receivable - Beginning 800,000

Sales Returns -15,000
Sales 6,150,000
Write Off -35,000
Collection -6,020,000
 Accounts Receivable - Ending 880,000

3. Allowance for Sales Returns - Beginning -25,000

Sales Returns -15,000
Estimated Sales Returns 20,000
Allowance for Sales Returns - End -20,000

4. Gross Sales 6,150,000

Sales Returns -15,000
Net Sales 6,135,000

PROBLEM 5-24
1. B
2. A
3. A
4. C
5. C
6. D
7. A
8. A
9. D
10. B

PROBLEM 5-25
1. C
2. B
3. C
4. C