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 1,300,000

Credit sales 5,400,000
Collections from customers, excluding recovery 4,750,000
Accounts written off 125,000
Collection of accounts written off in prior year
(customer credit was not reestablished) 25,000
Estimated 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 be
a. 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 1/1 650,000

Credit sales 2,700,000
Sales returns 75,000
Accounts written off 40,000
Collections from customers 2,150,000
Estimated future sales returns at 12/31 50,000
Estimated 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 1,200,000

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

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

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

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

a. 1,850,000
b. 1,835,000
c. 1,815,000
d. 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 3,600,000

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

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

a. 605,000
b. 890,000
c. 825,000
d. 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 7,800,000
Accounts receivable – officers 500,000
Debit balances – creditors 300,000
Postdated checks from customers 400,000
Subscriptions receivable 800,000
Accounts payable for merchandise 4,500,000
Credit balances in customers' accounts 200,000
Cash received in advance from customers
for goods not yet shipped 100,000
Expected 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. 8,950,000
b. 8,800,000
c. 8,600,000
d. 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 930,000

Allowance 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 warehouse
used for storing some inventories 300,000
Total 1,500,000

Problem 7-7 (AICPA Adapted)

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. 480,000
b. 600,000
c. 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 450,000

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

Problem 7-9 (AICPA Adapted)

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 accounts

at 1/1 – credit balance 280,000
Accounts written off as uncollectible 230,000
Accounts receivable at 12/31 2,700,000
Uncollectible accounts recovery 50,000

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

a. 230,000
b. 200,000
c. 150,000
d. 100,000

Problem 7-10 (AICPA Adapted)

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

Accounts receivable 9,000,000

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

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

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

Problem 7-11 (AICPA Adapted)

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

Problem 7-12 (AICPA Adapted)

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

Problem 7-13 (AICPA Adapted)

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:

Estimated
Age 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. 480,000
b. 400,000
c. 380,000
d. 300,000

Problem 7-14 (AICPA Adapted)

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

Accounts receivable 12,000,000

Allowance 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. 1,400,000
b. 1,160,000
c. 200,000
d. 800,000
Problem 7-15 (PHILCPA Adapted)

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

Problem 7-16 (AICPA Adapted)

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

Debit Credit
Accounts receivable 5,000,000
Allowance for doubtful accounts 40,000
Net 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. 110,000
b. 150,000
c. 190,000
d. 600,000

Problem 7-17 (AICPA Adapted)

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

Problem 7-18 (AICPA Adapted)

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

Allowance for doubtful accounts – January 1 180,000

Sales 9,500,000
Sales returns 800,000
Accounts 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. 281,000
b. 265,000
c. 261,000
d. 241,000

Problem 7-19 (AICPA Adapted)

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

Problem 7-20 (AICPA Adapted)

The unadjusted trial balance of Barr Company at December 31, 2009, included the
following accounts:
 Debit Credit
Allowance for doubtful accounts 16,000
Sales 7,225,000
Sales return 125,000

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

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

Problem 7-21 (AICPA Adapted)

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, 1/1 250,000

Provision for doubtful accounts during 2009
(2% of credit sales of P10,000,000) 200,000
Accounts written off 205,000
Estimated uncollectible accounts per paging 12/31 220,000

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

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

Problem 7-22 (AICPA Adapted)

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. 480,000
b. 500,000
c. 600,000
d. 860,000
Problem 7-23 (PHILCPA Adapted)

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 understated

b. 20,000 understated 34,000 understated
c. 330,000 understated 40,000 understated
d. 330,000 understated 50,400 understated