Sol. Man. - Chapter 4 - Accounts Receivable - Ia Part 1a - 2020 Edition
Sol. Man. - Chapter 4 - Accounts Receivable - Ia Part 1a - 2020 Edition
Sol. Man. - Chapter 4 - Accounts Receivable - Ia Part 1a - 2020 Edition
Chapter 4
Accounts Receivable
PROBLEM 3: EXERCISES
1. Solution:
Trade receivables:
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160,00
Accounts receivable
0
Add back credit balance in customers' accounts 32,000
192,00
Adjusted accounts receivable
0
Notes receivable (trade) 16,000
208,00
Total trade receivables - Requirement (a)
0
Non-trade receivables currently collectible:
Notes receivable (current portion only) 16,000
Dividends receivable 3,200
Advances to suppliers (from debit balance in accounts payable) 19,200
Total current non-trade receivables 38,400
246,40
Trade and other receivables - Requirement (b) 0
2. Solutions:
Requirement (a):
Journal entry on date of sale:
Accounts receivable 7,084.80 a
Revenue 7,084.80 a
a
(10,000 x 80% x 90%) = 7,200 invoice price; [7,200 – (7,200 x 2% x 80%)] =
7,084.80
❖ Subsequent measurement
The adjustment is computed as follows:
Invoice amount (10,000 x 80% x 90%) 7,200
Multiply by: 2%
Total available discount 144
Multiply by: Revised estimate 40%
Discount expected to be taken (revised) 57.60
Requirement (b):
The entity reports account receivable and net revenue of ₱7,142.40
in its year-end financial statements.
3. Solutions:
Requirement (a): Bad debt expense
Total sales 1,320,000
Cash sales (220,000)
Gross credit sales 1,100,000
Sales returns and discounts on credit sales (13,200 –
(11,000)
2,200)
Net credit sales 1,089,000
Multiply by: Percentage of net credit sales 2%
Bad debt expense 21,780
4. Solutions:
Requirement (a): Bad debt expense
Accounts receivable
Jan. 1 40,000 2,500 Write-off
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5. Solution:
(Total Write-offs from 20x1 to 20x3) less (Total
Percentage
Recoveries from 20x1 to 20x3)
(Jan. 1, 20x4) =
Total Net credit sales from 20x1 to 20x3
= [(21K + 30K + 45K) – (3K + 9K + 15K)] ÷ (300K + 480K + 600K)
= (96,000 – 27,000) ÷ 1,380,000
Percentage (Jan. 1, 20x4) = (69,000 ÷ 1,380,000) = 5%
6. Solution:
Receivable % Required
Days past due balances Uncollectible allowance
(a) (b) (a) x (b)
● Not due - 0 to 15 days of age 350,000 None -
● Not due - 16 to 30 days of age 210,000 None -
● 1 - 30 days past due 175,000 3% 5,250
● 31 - 60 days past due 140,000 10% 14,000
● 61 - 90 days past due 105,000 15% 15,750
● 91 - 120 days past due 70,000 35% 24,500
Totals 1,050,000 59,500
7. Solutions:
Requirement (a): Unadjusted bad debt expense
Net credit sales
4,200,000
Percentage of credit sales 2%
Unadjusted bad debts expense 84,000
5. A
Solution:
Allowance for bad debts
10,800 Jan. 1
Write-offs 18,000 13,500 Bad debts expense (450K x 3%)
Dec. 31 6,300
7. A
Solution:
Days Estimated %
Allowance
outstanding Amount uncollectible
0 - 60 120,000 1% 1,200
61 - 120 90,000 2% 1,800
Over 120 100,000 6% 6,000
9,000
8. C Solution:
Accounts receivable
beg. 150,000
Credit sales 600,000 410,000 Collections, excld. recoveries
9,000 Write-off
331,000 end.
9. A Solution:
Accounts receivable
beg. 80,000
150,00
Credit sales 0 120,000 Collections, excldg. recoveries
10,000 Write-off
100,000 end.
10. B
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Solutions:
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2)
a. Accounts receivable 3,000
Allowance for bad debts 3,000
To reverse the previous write-off
Cash 3,000
Accounts receivable 3,000
To record the collection of accounts receivable
b. Cash 25,000
Accounts receivable 25,000
To record the collection of accounts receivable
Accounts receivable
Unadjusted 480,000
(1) 20,000
(2a) 3,000 3,000
25,000 (2b)
(2c) 19,000 9,000 (4)
485,000 Adjusted
Solutions:
Requirement (a):
BDE - 20x2: (9,824,000 x 80% x 2.5%) = 196,480
BDE - 20x1: (2,670,000 x 80% x 2.5%) = 53,400
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Requirement (b):
Sincerely,
2. Solutions:
a. FOB shipping point, freight collect
Dec. 27, -
20x1 No entry
Dec. 31, Accounts receivable 1,600
20x1
Sales 1,600
to record sale on account
Jan. 2, -
20x2 No entry
Jan. 5, Cash 1,600
20x2
Accounts receivable 1,600
to record settlement of accounts receivable
Dec. 31, -
20x1 No entry
-
Jan. 2, Accounts receivable 1,550
20x2
Freight-out 50
Sales 1,600
to record sale on account and freight
accommodated by the buyer
Jan. 5, Cash 1,550
20x2
Accounts receivable 1,550
to record collection of account receivable net of
reimbursement for the freight
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3. Solutions:
1. Sale on account
Accounts receivable 87,840
Revenue 87,840
1. Sale on account
Accounts receivable (100K x 90%) 90,000
Revenue 90,000
Sales discount 2,160
Allowance for sales discount 2,160
4. Solution:
Requirement (a):
(a)
Accounts receivable 250,000
Sales 250,000
(b)
Cash 220,000
Accounts receivable 220,000
(c)
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(d)
Allowance for doubtful accounts 15,000
Accounts receivable 15,000
(e)
Accounts receivable 8,000
Allowance for doubtful accounts 8,000
Cash 8,000
Accounts receivable 8,000
Requirement (b):
Accounts
receivable
beg. 120,000
Sales on Collections, excluding
account 250,000 220,000 recoveries
15,000 Write-offs
Recovery 8,000 8,000 Collection on recovery
135,000 end.
Requirement (c):
Accounts receivable, end. 135,000
Allowance for bad debts, end. (32,000)
Carrying amount, end. 103,000
5. Solutions:
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Accounts receivable
beg. 180,000
Net credit
Write-offs
sales 810,000 15,800
Collections, excldg.
781,000 recoveries
193,200 end.
6. Solution:
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Amoun % Required
Days outstanding
t uncollectible allowance
0 – 60 190,000 1%
1,900
61 – 90 240,000 3%
7,200
91 - 120 30,000 7%
2,100
Over 120 10,000 10%
1,000
Totals 470,000 12,200
10,100 beg.
Write-offs Recoveries
4,600 200
(1) Bad debts
6,500 (squeeze)
(2) end.
12,200