Account Receivable

Practical Accounting 1 hblacaba

ACCOUNTS RECEIVABLE

1. Roxy Company had the following information for 2009 relating to its accounts receivable:

Accounts receivable at January 1 1,300,000Credit sales 5,400,000Collections from customers, excluding recovery 4,750,000Accounts written off 125,000Collection of accounts written off in prior year

(customer credit was not reestablished) 25,000Estimated uncollectible receivables per aging

of receivables at December 31 165,000

On December 31, 2009, the balance of accounts receivable, before allowance for doubtful accounts should bea. 1,825,000 b. 1,850,000 c. 1,950,000 d. 1,990,000

2. The following data relate to accounts receivable of Jay Company for the year 2009:

Accounts receivable 1/1 650,000Credit sales 2,700,000Sales returns 75,000Accounts written off 40,000Collections from customers 2,150,000Estimated future sales returns at 12/31 50,000Estimated uncollectible accounts at 12/31 110,000

What amount should Jay report for accounts receivable, before allowances for sales returns and uncollectible accounts, at December 31, 2009?a. 1,200,000 b. 1,125,000 c. 1,085,000 d. 925,000

3. Rex Company had the following information relating to its accounts receivable for the year ended December 31,2009:

Accounts receivable at January 1 1,200,000Allowance for doubtful accounts at January 1 60,000Credit sales 5,300,000Collections from customers 4,650,000Accounts written off 75,000Estimated uncollectible receivable at December 31 110,000

1. At December 31, 2009, Rex’s allowance for doubtful accounts should be

a. 135,000b. 125,000c. 110,000d. 95,000

2. At December 31, 2009, Rex’s accounts receivable, before allowance for doubtful accounts, should be

a. 1,850,000b. 1,835,000c. 1,815,000d. 1,775,000

Problem 7-4 (IAA)

The following data were taken from the records of Infra Company for the year ended December 31, 2009:

Sales on account 3,600,000Notes received to settle accounts 400,000Provision for doubtful accounts 90,000Accounts receivable determined to be worthless 25,000Purchases on account 3,900,000Payments to creditors 3,200,000Discounts allowed by creditors 260,000Merchandise returned by customer 15,000Collections received to settle accounts 2,450,000Notes given to creditors in settlement of accounts 250,000Merchandise returned to suppliers 70,000Payments on notes payable 100,000Discounts taken by customers 40,000Collections received in settlement of notes 180,000

What is the net realize value of accounts receivable on December 31, 2009?

a. 605,000b. 890,000c. 825,000d. 670,000

Problem 7-5 (CGAC)

When examining the accounts of Brute Company, You ascertain that balances relating to both receivables and payables are included in a single controlling account called receivables control that has a debit balance revealed the following:

Debit Credit

Accounts receivable – customers 7,800,000Accounts receivable – officers 500,000Debit balances – creditors 300,000Postdated checks from customers 400,000Subscriptions receivable 800,000Accounts payable for merchandise 4,500,000Credit balances in customers' accounts 200,000Cash received in advance from customers

for goods not yet shipped 100,000Expected bad debts 150,000

After further analysis of the aged accounts receivable, you determined that the allowance for doubtful accounts should be P200,000. What is the correct total of current net receivables?

a. 8,950,000b. 8,800,000c. 8,600,000d. 8,850,000

Problem 7-6 (AICPA Adapted)

On December 31, 2009 balance sheet of Miami Company, the current receivables consisted of the following:

Trade accounts receivable 930,000Allowance for uncollectible accounts ( 20,000)Claim against shipper for goods sent by

Miami on consignment at 130% of cost(not included in Miami's ending inventory) 260,000

Security deposit on lease of warehouseused for storing some inventories 300,000

Total 1,500,000


On January 1, 2009, Mann Company's allowance for doubtful accounts had a credit balance of P300,000. During 2009 Mann charged P640,000 to doubtful accounts expense, wrote off P460,000 of uncollectible accounts receivable, and unexpectedly recovered P120,000 of bad debts written off in the prior year. The allowance for doubtful accounts at December 31, 2009 would be

a. 480,000b. 600,000c. 640,000

d. 940,000

Problem 7-8 (PHILCPA Adapted)

The balance sheet of Square Company shows accounts receivable at January 1, 2009 as follows:

Accounts receivable 450,000Allowance for doubtful accounts 9,000

During 2009, transactions relating to the accounts receivable were as follows:

Sales on account, P4,800,000.Cash collections of accounts receivable totaled P3,920,000, after discounts of P80,000

were allowed for prompt payment.Bad accounts previously written off prior to 2009 amounting to 5,000 were recovered.The company decided to provide P26,000 for doubtful accounts by a journal entry at the

end of the year.Accounts receivable of P700,000 have been pledged to a local bank on a loan of P400,000. Collections of P150,000 were made on these receivables (not included in the collections previously given) and applied as partial payment for the loan.

Estimated realizable value of accounts receivable at December 31, 2009 was

a. 1,065,000b. 1,060,000c. 1,074,000d. 1,074,000


Orr Company prepared an aging of its accounts receivable at December 31, 2009 and determined that the net realizable value of the accounts receivable 2009 was P2,500,000. Additional information is available as follows:

Allowance for uncollectible accountsat 1/1 – credit balance 280,000

Accounts written off as uncollectible 230,000Accounts receivable at 12/31 2,700,000Uncollectible accounts recovery 50,000

For the year ended December 31, 2009, Orr's uncollectible accounts expense would be

a. 230,000b. 200,000c. 150,000

d. 100,000


An analysis and aging of Jay's Company's accounts receivable at December 31, 2009 disclosed the following:

Accounts receivable 9,000,000Allowances for uncollectible accounts, per book 500,000Accounts estimated to be uncollectible 640,000

At December 31, 2009, the net realizable value of accounts receivable should be

a. 8,860,000b. 8,500,000c. 8,360,000d. 7,860,000


Mill Company's allowance for doubtful accounts was P1,000,000 at the end of 2009 and P900,000 at the end of 2005. For the year ended December 31, 2009, Mill reported bad debt expense of P160,000 in its income statement. What amount did Mill debit to the appropriate account in 2009 to write off actual bad debts?

a. 60,000b. 100,000c. 160,000d. 260,000


The following information pertains to Tara Company's accounts receivable at December 31, 2009:

Days Estimated outstanding Amount % uncollectible 0 – 60 1,200,000 1% 61 – 120 900,000 2% Over 120 1,000,000 6%

3,100,000

During 2009, Tara wrote off P70,000 in receivables and recovered P40,000 that had been written off in prior years. Tara's January 1, 2009, allowance for uncollectible accounts

was P100,000. Under the aging method, what amount of allowance for uncollectible accounts should Tara report at December 31, 2009?

a. 90,000b. 100,000c. 130,000d. 190,000


On March 31, 2009, Vale Company had an unadjusted credit balance of P100,000 in its allowance for uncollectible accounts. An analysis of Vale's trade accounts receivable at that date revealed the following:

EstimatedAge Amount uncollectible

0 – 30 days 6,000,000 5% 31 – 60 days 400,000 10% Over 60 days 200,000 140,000

What amount should Vale report as allowance for uncollectible accounts in its March 31, 2009, balance sheet?

a. 480,000b. 400,000c. 380,000d. 300,000


Abbeville Company had the following accounts receivable and allowance for uncollectible accounts at the end of 2009 before any expense adjustment:

Accounts receivable 12,000,000Allowance for uncollectible accounts 800,000

Sale in 2009 totaled P80,000,000 (8% of sales were for cash), and write-offs of customer accounts totaled P600,000. Allowance for uncollectible accounts is estimated to be 2% of accounts receivable. What is the balance in the allowance account at the beginning of 2009?

a. 1,400,000b. 1,160,000c. 200,000d. 800,000


Delta Company sells to wholesalers on terms 2/15, net 30. Delta has no cash sales but 50% of Delta's customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta's customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta's trade accounts receivable at December 31, 2009 revealed the following:

Age Amount Collectible 0 – 15 days 2,000,000 100% 16 – 30 days 1,200,000 95% 31 – 60 days 100,000 90% Over 60 days 50,000 50%

3,350,000

In its December 31, 2009 balance sheet, what amount should Delta report as allowance for discounts?

a. 20,000b. 32,000c. 33,500d. 40,000


The following accounts were abstracted from Manchester Company's unadjusted trial balance at December 31, 2009:

Debit CreditAccounts receivable 5,000,000Allowance for doubtful accounts 40,000Net credit sales 20,000,000

Manchester estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2009, the allowance for doubtful accounts should have a credit balance of

a. 110,000b. 150,000c. 190,000d. 600,000


Ward Company estimates its uncollectible accounts expense to be 2% of credit sales. Ward's credit sales for 2009 were P10,000,000. During 2009, Ward wrote off P180,000 of uncollectible accounts. Ward's allowance for uncollectible accounts had a P150,000 balance on January 1, 2009. In its 2009 income statement, what amount should Ward report as uncollectible accounts expense?

a. 230,000b. 200,000c. 180,000d. 170,000


All of Ladd Company's sales are on a credit basis. The following information is available for 2009:

Allowance for doubtful accounts – January 1 180,000Sales 9,500,000Sales returns 800,000Accounts written off as uncollectible 200,000

Ladd provides for doubtful accounts expense at the rate of 3% of net sales. At December 31, 2009, the allowance for doubtful accounts balance should be

a. 281,000b. 265,000c. 261,000d. 241,000


At January 1, 2009, Jamin Company had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past experiences, 2% of Jamin's credit sales have been uncollectible. Credit sales for 2009 were P9,000,000. In its December 31, 2009 balance sheet, what amount should Jamin report as allowance for uncollectible accounts?

a. 115,000b. 180,000c. 245,000d. 440,000


The unadjusted trial balance of Barr Company at December 31, 2009, included the following accounts:

Debit CreditAllowance for doubtful accounts 16,000Sales 7,225,000Sales return 125,000

Barr estimates its uncollectible receivables at 2% of net sales. For 2009, Barr should report doubtful accounts expense of

a. 158,000b. 144,500c. 142,000d. 126,000


Effective with the year ended December 31, 2009, Hall Company adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable. The following data are available:

Allowance for doubtful accounts, 1/1 250,000Provision for doubtful accounts during 2009

(2% of credit sales of P10,000,000) 200,000Accounts written off 205,000Estimated uncollectible accounts per paging 12/31 220,000

After year-end adjustment, the doubtful accounts expense of 2009 should be

a. 220,000b. 205,000c. 200,000d. 175,000


Clark Company's allowance for doubtful accounts had a credit balance of P120,000 at December 31, 2005. Clark accrues doubtful accounts expense at 4% of credit sales. During 2009 Clark's credit sales amounted to P15,000,000, and uncollectible accounts totaling P480,000 were written off. The aging of accounts was required at December 31, 2009. Clark's doubtful accounts was required at December 31, 2009. Clark's doubtful accounts expense for 2009 would be

a. 480,000b. 500,000c. 600,000d. 860,000


Germany Company started its business on January 1, 2009. After considering the collection experience of other companies in the industry, Germany established an allowance for doubtful accounts estimated at 5% of credit sales. Outstanding accounts receivable recorded on December 31, 2009 totaled P460,000, while the allowance for doubtful accounts had a credit balance of P50,000 after recording estimated doubtful accounts expense for December and after writing off P10,000 of uncollectible accounts.

Further analysis of the company's accounts showed that merchandise purchased in 2009 amounted to P1,800,000 and ending merchandise inventory was P300,000. Goods were sold at 40% above cost. 80% of total sales were on account. Total collections from customers, on the hand, excluding proceeds from cash sales, amounted to P1,200,000. Considering the given data, the accounts receivable and allowance for doubtful accounts are

Accounts receivable Allowance for doubtful accounts

a. 10,000 understated 24,000 understatedb. 20,000 understated 34,000 understatedc. 330,000 understated 40,000 understatedd. 330,000 understated 50,400 understated

Documents

Account Receivable