Acctg132-Intermediate Accounting 1

Exercises on Accounts receivable

1. The following information is from Gum Corp.’s first year of operations:

1. Merchandise purchases P450,000

2. Ending merchandise inventory 123,000
3. Collections from customers 150,000
4. All sales are on account and goods sell at 30% above cost

What is the accounts receivable balance at the end of the company’s first year of operations?
Niko

2. Ban Co. reported the following information at the end of its first year of operations, December
31, 2023:

Expected credit loss for 2023 P271,000

Uncollectible accounts written off during 2023 35,400
Net realizable value of accounts receivable 895,000

What is the accounts receivable balance at December 31, 2023? Shawn

3. MAH Co.’s analysis of its aging accounts receivable at December 31, 2023 disclosed the
following:

Accounts receivable P460,000

Accounts estimated to be uncollectible (per) aging 95,000
Allowance for credit loss (per books) 103,000

What is the net realizable value of Mah’s receivables at December 31, 2023? Melyeza

4. The following amounts are shown on the 2023 and 2022 financial statements of San Fran Co:

2023 2022

Accounts receivable ? 470,000

Allowance for credit loss 20,000 10,000
Net Sales 2,600,000 2,400,000
Cost of goods sold 1,900,000 1,752,000

San Fran’s accounts receivable turnover rate for 2023 is 6.5 times

What is the accounts receivable balance at December 31, 2023? Gab Gagarin
Cal Corp.’s accounts receivable subsidiary ledger shows the following information:

Customer A/R Balance Invoice

Dec. 31, 2023 Date Amount
Aruy, Inc P35,180 12/6/2023 P14,000(0-30 days)
11/29/2023 21,180(31-60 days)
Naku Co. 20,920 9/27/2023 12,000(91-120 days)
8/20/2023 8,920(over 120 days)
Syak Corp. 30,600 12/08/2023 20,000(0-30 days)
10/25/2023 10,600(61-90 days)
Trip Co 45,140 11/17/2023 23,140(31-60 days)
10/9/2023 22,000(61-90 days)
Uy Co 31,600 12/12/2023 19,200(0-30 days)
12/2/2023 12,400(0-30 days)
Xak Corp 17,400 9/12/2023 17,400(91-120 days)

The lifetime expected credit loss rates below are based on Cal’s receivable collection experience,
adjusted for forward-looking estimates.

Age of Accounts Rates

0 - 30 days 1%
31 - 60 days 1.5%
61 - 90 days 3%
91 - 120 days 10%
Over 120 days 50%

The allowance for credit loss account had a debit balance of P5,500 on December 31, 2023, before
adjustment.

1. The company’s accounts receivable under “61-90 days” category-32,600

2. The company’s accounts receivable under “91-120 days” category-29,400
3. The allowance for credit loss to be reported in the statement of financial position at December
31, 2023 is-please refer to excel
4. What entry should be made on December 31, 2023, to adjust the allowance for credit loss
account?-please refer to excel
5. What is the net realizable value of accounts receivable at December 31, 2023?-please refer to
excel
Illustration on Gross and Net Method of Recording Sales on Account

Nar Company entered into the following during the year:

Jan. 2 Sold 10,000 units of merchandise to Rex Company at a selling price of P100 less trade discounts
of 10% and 5% with terms of 2/10, 1/20, n/20.

Jan. 4 Sold 15,000 units of merchandise to Zeus Company at a selling price of P100 less trade accounts
of 10% with terms 2/10, 1/20, n/30.

Jan. 6 Rex returned 2,000 units of goods to the company.

Jan. 10 Rex paid his account availing of the cash discount

Feb 2 Zeus Company paid his account

Required: Prepare all the necessary entries assuming the use of:
1. Gross Method
2. Net Method
3. Allowance Method