FILIPINO ACADEMY UK

ACCOUNTING FOR RECEIVABLES

Prepared by: Dave Christian B. Cabo, CPA, MBA, CMA, MRITax,CTT

I. Provide what is required.

1. ABC Company provided the following information:

Trade receivables, collectible in one year 200,000.00

Trade receivables, collectible in two years 150,000.00
Notes receivable, collectible 30 days (trade) 100,000.00
Notes receivable, collectible 370 days (non-trade) 200,000.00
Non-trade receivables, collectible 2 years 600,000.00
Non-trade receivables, collectible 1 year 800,000.00

Compute for the following:

1. Current trade receivables

2. Non-current trade receivables
3. Current non-trade receivables
4. Non-current non-trade receivables
5. Current Trade and Non-trade receivables

2. DEF Company provided the following information:

Trade receivables, collectible in one year 300,000.00

Trade receivables, collectible in two years 50,000.00
Notes receivable, collectible 30 days (non-trade) 200,000.00
Notes receivable, collectible 370 days (trade) 300,000.00
Non-trade receivables, collectible 2 years 700,000.00
Non-trade receivables, collectible 1 year 80,000.00

Compute for the following:

6. Current trade receivables

7. Non-current trade receivables
8. Current non-trade receivables
9. Non-current non-trade receivables
10. Current Trade and Non-trade receivables

Allowance for doubtful accounts Accounts Receivable

Beginning balance Beginning balance

+ Recovery - Collection

- Write-off + Recovery

+ Doubtful accounts expense - Write-off

Ending allowance for doubtful accounts Ending balance

II. Compute for the ending allowance for doubtful accounts

1. Beginning balance- 2,000.00

Recovery- 500.00
Write-off- 100.00

2% of the total sales (2,000,000.00) is the estimated uncollectible amount.

 2. Beginning balance- 3,000.00
Recovery- 800.00
Write-off- 1,100.00

3% of the total sales (2,000,000.00) is the estimated uncollectible amount.

3. 3% of the accounts receivable is estimated to be uncollectible- 400,000.00

4. 5% of the accounts receivable is estimated to be uncollectible- 500,000.00

III. Compute for the ending balance of the accounts receivables

1. Beginning balance- 400,000.00

Collection- 200,000.00
Recovery- 100,000.00
Write-off- 10,000.00

2. Beginning balance- 400,000.00

Collection- 100,000.00
Write-off- 10,000.00

IV. Prepare the journal entries required.

Allowance method Direct write-off

Doubtful account expense XXX
Doubtful accounts No entry
Allowance for doubtful account XXX
Accounts receivable proved to be Allowance for doubtful account XXX Doubtful accounts expense XXX
worthless Accounts Receivable XXX Accounts Receivable XXX
Recovery of accounts previously Accounts Receivable XXX Accounts Receivable XXX
written-off Allowance for doubtful accounts XXX Doubtful accounts expense XXX

A. Allowance method

1. 200,000.00 of the accounts receivables is estimated to be worthless.

2. 10,000.00 of the accounts receivables has been proven to be worthless.

3. 5,000 of the accounts previously written-off has been recovered.

B. Direct write-off

4. 200,000.00 of the accounts receivables is estimated to be worthless.

5. 10,000.00 of the accounts receivables has been proven to be worthless.

6. 5,000 of the accounts previously written-off has been recovered.