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RAPPLER HOLDINGS CORPORATION’S accounts receivable subsidiary ledger shows the following

information:
ACCOUNT INVOICE
BALANCE
CUSTOMER DEC. 31, 2016 DATE AMOUNT
Mocha, Inc. P35,180 12/06/16 P14,000
11/29/16 21,180
Andanar Co. 20,920 9/27/16 12,000
8/20/16 8,920
Alvarez Corp. 30,600 12/08/16 20,000
10/25/16 10,600
Win Co. 45,140 11/17/16 23,140
10/09/16 22,000
EX-B Co. 31,600 12/12/16 19,200
12/02/16 12,400
Isabelle Co. 17,400 09/12/16 17,400

The estimated bad debt rates below are based on RAPPLER HOLDINGS CORPORATION’S receivable
collection experience.
Age of Accounts Rate
0 – 30 days 1%
31 – 60 days 1.5%
61 – 90 days 3%
91 – 120 days 10%
Over 120 days 50%
The allowance for bad debts account had a debit balance of P5,500 on December 31, 2016, before
adjustment.
1. The company’s accounts receivable under “61-90days” category should be
A. P32,600 C. P44,600
B. P44,320 D. P42,000
2. The company’s accounts receivable under “91-120days” category should be
A. P38, 320 C. P29,400
B. P40,000 D. P12,000
3. The allowance for bad debts to be reported in the statement of financial position at December
31, 2016, is
A. P9,699 C. P4,199
B. P15,199 D. P9,669
4. What entry should be made on December 31, 2016, to adjust the allowance for bad debts
account?
A. Bad debt expense 15,199
Allowance for bad debts 15,199
B. Bad debt expense 4,199
Allowance for bad debts 4,199
C. Allowance for bad debts 5,500
Bad debt expense 5,500
D. Bad debt expense 9,699
Allowance for bad debts 9,699
5. What is the net realizable value of accounts receivable at December 31, 2016?
A. P165, 641 C. P196,039
B. P171,141 D. P186,340
RAPPLER HOLDINGS CORPORATION
ACCOUNTS RECEIVABLE AGING SCHEDULE
December 31, 2016

Balance 0-30 31-60 61-90 91-120 Over120


Customer 12-31-16 Days Days Days Days Days
Mocha, Inc. P35,180 P14,00 P21,180
Andanar Co. 20,920 P12,000 P8,920
Alvarez Corp. 30,600 20,000 P10,600
Win Co. 45,140 23,140 22,000
EX-B Co. 31,600 31,600
Isabelle Co. 17,400 17,400
P180,840 P65, 600 P44,320 P32,600 P29,400 P8,920
1. Answer: A
2. Answer: C

COMPUTATION OF REQUIRED ALLOWANCE


DECEMBER 31, 2016
0 – 30 days P65,600 x 1% = P656
31 – 60 days 44,320 x 1.5% = 665
61 – 90 days 32,600 x 3% = 978
91 – 120 days 29,400 x 10% = 2,940
Over 120 days 8,920 x 50% = 4,460
Total P9,699

3. Answer: A
4. Bad debt expense 15,199
Allowance for bad debts 15,199

Required allowance (see no. 2) P 9,699


Add: Allowance balance – debit 5,500
Increase in allowance P15,199
Answer: A
5. Answer: B
Accounts Receivable P180,840
Less: Allowance for bad debts (see no. 2) 9,699
Net realizable value, Dec. 31, 2016 P171,141

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