CHAPTER 3 - RECEIVABLES Question no. 7 a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p.
Accounts Receivable Receivables from Employees (part of non-trade receivables) – current assets Advances to Suppliers – Current assets or deduction from Accounts Payable to the same supplier Accounts Receivable Customers’ Accounts with Credit Balances – Current Liabilities Cost of merchandise must be included in inventories Accounts Receivable Subscriptions Receivable – current asset if collectible within 12 months; otherwise, noncurrent asset or deduction from Shareholders’ Equity Other Non-Trade Receivables – Current asset or non-current asset depending on terms of payment Advances to Supplie rs – Current Assets Suppliers’ Accounts with Debit Balances or Advances to Suppliers – Current assets Accounts Receivable Claims for Income Tax Refund – Current Assets Accounts Receivable , amount of loan presented pre sented separately separa tely as part of lia bilities Accounts Receivable Not recognized anymore (for write off)
PROBLEMS
3-1
(Ginoo Company) Gross Method Dec.
9
10 19
26 31 Jan. 5
Accounts Receivable-First Lady Sales 80,000 x 90% x 95%
68,400
Accounts Receivable-Men’s Receivable-Me n’s World Sales
50,000
Cash Sales Discounts Accounts Receivable -First Lady
67,032 1,368
Accounts Receivable-Teens’ Receivable-Tee ns’ Kingdom Sales
40,000
Sales Discounts Allowance for Sales Discounts Cash Allowance for Sales Discounts Accounts Receivable -Teens’ Kingdom
68,400
50,000
68,400 40,000 800 800 39,200 800 40,000
Chapter 3 – Receivables
9
Cash Accounts Receivable -Men’s World
Net Method Dec. 9 Accounts Receivable-First Lady Sales 68,400 x .0.98 10 19 26 31
50,000 50,000
67,032 67,032
Accounts Receivable-Men’s Receivable-Me n’s World Sales
49,000
Cash Accounts Receivable -First Lady
67,032
Accounts Receivable-Teens’ Receivable-Tee ns’ Kingdom Sales
39,200
Accounts Receivable-Men’s Receivable-Me n’s World Sales Discount Forfeited
49,000 67,032 39,200 1,000 1,000
2013
Jan. 5
9
Cash Accounts Receivable – Teens’ Kingdom
39,200
Cash Accounts Receivable -Men’s World
50,000
Allowance Method Dec. 9 Accounts Receivable-First Lady Allowance for Sales Discount Sales 10
Dec. 19
26
31 Jan. 5
9
39,200
50,000
68,400 1,368 67,032
Accounts Receivable-Men’s Receivable-Me n’s World Allowance for Sales Discount Sales
50,000
Cash Allowance for Sales Discount Accounts Receivable -First Lady
67,032 1,368
Accounts Receivable-Teens’ Receivable-Tee ns’ Kingdom Allowance for Sales Discount Sales Allowance for Sales Discount Sales Discount Forfeited
1,000 49,000
68,400 40,000 800 39,200 1,000 1,000
Cash Allowance for Sales Discount Accounts Receivable -Teens’ Kingdom Cash Accounts Receivable -Men’s World
14
39,200 800 40,000 50,000 50,000
Chapter 3 – Receivables
3-2.
(Colleco Supermarket) June 1- Accounts Receivable – Citibank 30 Accounts Receivable - BDO Accounts Receivable – Metrobank Credit Card Service Charges Sales Cash
2,450,000 1,764,000 1,470,000 116,000 5,800,000 3,234,000
Accounts Receivable - Citibank Accounts Receivable - Metrobank 3-3
(Colayco Company) (1) July 14 Allowance for Doubtful Accounts Accounts Receivable -Moret Co. 31 Aug. 15
Nov.
1
Nov. 4
5 Nov. 9
Nov. 15 15 Dec. 13
2,156,000 1,078,000
10,000 10,000
Notes Receivable Sales
12,000
Cash Notes Receivable Sales
20,000 15,000
Cash Credit Card Service Charge Sales 4% x 20,000 = 800
19,200 800
Accounts Receivable-P. Noval Notes Receivable Interest Revenue 12,000 x .10 x 90/360 = 300
12,300
12,000
35,000
20,000
12,000 300
Accounts Receivable-Credit Receivable-Cre dit Card Sales
9,000
Cash Credit Card Service Charge Accounts Receivable -Credit Card 5% x 9,000 = 450
8,550 450
9,000
9,000
Accounts Receivable-Moret Receivable-Mor et Co. Allowance for Bad Debts De bts
10,000
Cash Accounts Receivable -Moret Co.
10,000
Cash Notes Receivable Interest Income 15,000 x 12% x 120/360 = 600
15,600
10,000
15
10,000 15,000 600
Chapter 3 – Receivables
3-4.
(Format Company) a.
b.
Carrying value of the note on January 1, 2012 P6,000,000 x 0.6575 Prevailing interest rate Interest revenue for 2012 Carrying value, January 1, 2012 Add amortization amortizat ion of discount during 2010 Carrying value, December 31, 2010
P3,945,000 15% P 591,750 P3,945,000 591,750 P4,536,750
(or simply P3,945,000 x 1.15 = P4,536,750) 3-5
(Formatted Company) a.
b.
3-6.
Carrying value of the note on January 1, 2012 (P2 M x 2.2832) Interest rate Interest revenue for 2012
P4,566,400 15% P 684,960
Carrying value, December 31, 2012 4,566,400 + 684,960 – 2,000,000 Interest rate Interest revenue for 2013
P3,251,360 15% P 487,704
Carrying value, January 1, 2012 Add amortization amortizat ion of discount during 2012 Less first payment of principal Carrying value, December 31, 2012
(HRV Company) Accrued interest intere st at June 30, 2012 (3,000,000 (3, 000,000 – 1,000,000) x 12%
3-7.
P4,566,400 684,960 (2,000,000) P3,251,360
P 240,000
(FX Corporation) a. 2012 Jan. 1
Notes Receivable Accumulated Depreciation Depr eciation Loss on Sale of Equipment Equipment Discount on Notes Receivable
100,000 420,000 8,820 500,000 28,820
100,000 x 0.7118 = 71,180 80,000 – 71,180 = 8,820 Loss on Sale 100,000 – 71,180 = 28,820 Discount
b. 2012 Dec. 31
2013 Dec. 31
Discount on Notes Receivable Interest Revenue 12% x 71,180
8,542
Discount on Notes Receivable Interest Revenue 12% x (71,180 + 8,542)
9,567
8,542
9,567
16
Chapter 3 – Receivables
2014 Dec. 31
Dec. 31
3- 8
Discount on Notes Receivable Interest Revenue 12% x (71,180 +8,542 + 9,567) (or 28,820 – 8,542 – 9,567)
10,711 10,711
Cash Notes Receivable
100,000 100,000
(Pinky Pop Company) The note is interest-bearing, but the rate of interest of the note is unreasonably lower than the prevailing rate for similar obligation. Thus, the present value of the note is determined as follows: 2.5 M + (5% x 7.5 M) = 2,875,000 x 0.8929 P2,567,088 2.5 M + (5% x 5.0 M) = 2,750,000 x 0.7972 2,192,300 2.5 M + (5% x 2.5 M) = 2,625,000 x 0.7118 1,868,475 Total P6,627,863 or
a.
2.5 M x 2.4018 (5% x 7.5 M) x (5% x 5.0 M) x (5% x 2.5 M) x Total Amortization Table Date 01/01/12 12/31/12 12/31/13 12/31/14
P6,004,500 334,838 199,300 88,975 P6,627,613
0.8929 0.7972 0.7118
Payment of Principal 2,500,000 2,500,000 2,500,000
Interest Paid 375,000 250,000 125,000
Interest Revenue 795,344 545,785 281,008*
Amortization of Discount 420,344 295,785 156,008*
Carrying Value 6,627,863 4,548,207 2,343,992 ------------
*rounded off b.
Journal entries
2012
Jan. 1
Notes Receivable Discount on Notes Receivable Gain on Sale of Land Land 7,500,000 – 6,627,863 = 872,137 Discount 6,627,863 – 6,000,000 = 627,863 Gain
7,500,000
Cash Discount on Notes Receivable Interest Revenue Notes Receivable
2,875,000 420,344
Cash Discount on Notes Receivable Interest Revenue Notes Receivable
2,750,000 295,785
872,137 627,863 6,000,000
2012
Dec. 31
795,344 2,500,000
2013
Dec. 31
545,785 2,500,000
17
Chapter 3 – Receivables
2014
Dec. 31
3-9
Cash Discount on Notes Receivable Interest Revenue Notes Receivable
2,625,000 156,008 281,008 2,500,000
Pinky Pip Company The note is interest-bearing, but the rate of interest of the note is unreasonably higher than the prevailing rate for similar obligation. Thus, the present value of the note is determined as follows: 2.5 M + (18% x 7.5 M) = 3,850,000 2.5 M + (18% x 5.0 M) = 3,400,000 2.5 M + (18% x 2.5 M) = 2,950,000 Total or
2.5 M x (18% x (18% x (18% x Total
2.4018 7.5 M) x 5.0 M) x 2.5 M) x
x x x
0.8929 0.7972 0.7118
P3,437,665 2,710,480 2,099,810 P8,247,955 P6,004,500 1,205,415 717,480 320,310 P8,247,705*
0.8929 0.7972 0.7118
*Difference in the computations is due to rounding off b.
Amortization Table Date 01/01/10 12/31/10 12/31/11 12/31/12
Payment of Principal 2,500,000 2,500,000 2,500,000
Interest Paid 1,350,000 900,000 450,000
Interest Revenue 989,755 646,525 315,765*
Amortization of Premium 360,245 253,475 134,235*
Carrying Value 8,247,955 5,387,710 2,634,235 ------------
*Difference is due to rounding off b.
Journal entries
2012
Jan. 1
Notes Receivable Premium on Notes Receivable Gain on Sale of Land Land 8,247,955 – 7,500,000 = 747,955 Premium 8,247,955 – 6,000,000 = 2,247,955 Gain
7,500,000 747,955
Cash Premium on Notes Receivable Interest Revenue Notes Receivable
3,850,000
Cash Premium on Notes Receivable Interest Revenue Notes Receivable
3,400,000
2,247,955 6,000,000
2012
Dec. 31
360,245 989,755 2,500,000
2013
Dec. 31
18
253,475 646,525 2,500,000
Chapter 3 – Receivables
2014
Dec. 31
3-10
Cash Premium on Notes Receivable Interest Revenue Notes Receivable
2,950,000 134,235 315,765 2,500,000
(Word Company) Bad Debts Expense Allowance for Bad Debts
P52,000 50,000
Required balance in allowance account: (2% x 500,000) + (10% x 200,000) + (20% x 100,000) Reported balance in allowance before adjustments (debit) Required adjustment charged to bad debts expense 3-11
P50,000 2,000 P52,000
(Edit Company)
Allowance for Uncollectible Uncollectib le Accounts, beg Recovery of accounts previously written off Uncollectible accounts expense for 2012 Allowance for Uncollectible Uncollectib le Accounts, end Accounts written off during 2012 3-12 (Toyota Products, Inc.) a. b.
c. d.
e.
f.
g.
P 6,000 3,000 48,000 (12,000) P45,000
Accounts receivable Sales
4,800,000
Cash Sales discounts Accounts receivable
3,920,000 80,000
4,800,000
4,000,000
Allowance for uncollectible accounts Accounts receivable
20,000 20,000
Accounts receivable Allowance for uncollectible accounts
5,000
Cash Accounts receivable
5,000
Notes receivable Accounts receivable
25,000
Cash Notes payable-bank payable-ba nk
400,000
Cash Accounts receivable
150,000
Notes payable-bank payable-ban k Cash
150,000
5,000 5,000 25,000
400,000 150,000 150,000
Uncollectible Accounts Expense Allowance for Uncollectible Accounts
19
65,000 65,000
Chapter 3 – Receivables
9,000 – 20,000 + 5,000 = 6,000 debit 59,000 + 6,000 = 65,000
h.
Interest receivable Interest revenue
250 250
25,000 x 12% x 30/360
Accounts receivable (450,000+4,800,000–4,000,000–20,000–25,000–150,000) Less Allowance for uncollectible accounts Net realizable value/Net amortized cost 3-13
P1,055,000 59,000 P 996,000
(Rav, Inc.) Accounts Receivable, Receivab le, December 31, 31 , 2011 Sales on account during 2012 Cash received from customers Cash discounts allowed: (882,000 ÷ 98%) x 2% (495,000 ÷ 99%) x 1% Recovery of accounts written off Accounts written off as worthless Credit memoranda for sales returns Accounts Receivable, Receivab le, December 31, 31 , 2012
P 337,000 1,500,000 (1,600,000) P18,000 5,000
Allowance for Uncollectible Uncollectib le Accounts, Decembe Decemberr 31, 2011 Recovery of accounts written off Accounts written off as worthless Impairment loss on receivables Allowance for Uncollectible Uncollectib le Accounts, December Decembe r 31, 2012
(
23,000) 3,000 ( 11,000) ( 6,000) P 200,000 P 12,000 3,000 ( 11,000) 15,000 P 19,000
The computation may also be conveniently done through T-accounts, as follows: Accounts Receivable Balance, beg Sales on account Recovery
337,000 1,500,000 3,000
Total Balance, end
1,840,000 200,000
Collections Cash discounts Write off Sales returns Total
1,600,000 23,000 11,000 6,000 1,640,000
Allowance for Uncollectible Accounts Write off
11,000
Total
11,000
20
Balance, beg Recovery Impairment Total Balance, end
12,000 3,000 15,000 30,000 19,000
Chapter 3 – Receivables
3-14
(Revo Company) Allowance for Uncollectible Uncollectib le Accounts, January 1, 2012 Accounts written off Recovery of accounts previously written off Additional accounts written wr itten off Allowance for Uncollectible Uncollectib le Accounts, December Decembe r 31, 2012 before adjustments (debit balance) Required balance in Allowance account based on aging: (5% x 240,000) + (25% x 20,000) + (50% x 30,000) + (90% x 24,000) Required adjustment/Doubtful adjustment/Doubt ful Accounts Expense for 2012 Accounts Receivable, Receivab le, December 31, 2012 Less Allowance for Uncollectible Accounts Net amortized cost
3-15
(P 12,000) 53,600 P65,600 P654,000 53,600 P600,400
(Adventure Company) a. Accounts Receivable, January 1 Sales during 2012 Cash collected from customers Recovery of accounts previously written off Note received in settlement of an account Accounts written off as a s worthless Accounts Receivable, December 31
P 1,200,000 10,000,000 (8,720,000) 20,000 ( 400,000) ( 100,000) P 2,000,000
Accounts Receivable, December 31 Past due accounts Current accounts/Not yet past due
P 2,000,000 600,000 P 1,400,000
Required balance in Allowance for Uncollectible Accounts: 20% x 600,000 past due accounts 5% x 1,400,000 current accounts Total b.
c.
3-16
P 34,000 ( 47,000) 7,000 ( 6,000)
Allowance for Uncollectible Accounts, end Accounts written off during d uring the year as a s worthless Recovery of accounts previously written off Allowance for Uncollectible Accounts, beg Uncollectible Accounts Expense for year 2012
P 120,000 70,000 P 190,000 P 190,000 100,000 ( 20,000) ( 60,000) P 210,000
Accounts Receivable Less Allowance for Uncollectible Accounts Net amortized cost
P 2,000,000 190,000 P1,810,000
(Maynilad Company) Alternative 1 Carrying value (10 M + 1.2 M) Present value of future cash inflows: Principal due on 12/31/14 9M x 0.7972 Interest for 2 years 9M x 8% = 720,000; 720,000 x 1.6901 Impairment loss
21
11,200,000
P7,174,800 1,216,872
8,391,672 P2,808,328
Chapter 3 – Receivables
Entry: Restructured Notes Receivable Impairment Loss – Receivables Notes Receivable Interest Receivable Alternative 2 Carrying value (10 M + 1.2 M) Present value of future cash inflows: 2M + (8% x 10M) = 2,800,000 x 0.8929 2M + (8% x 8M) = 2,640,000 x 0.7972 2M + (8% x 6M) = 2,480,000 x 0.7118 2M + (8% x 4M) = 2,320,000 x 0.6355 2M + (8% x 2M) = 2,160,000 x 0.5674 Impairment loss Entry: Restructured Notes Receivable Impairment Loss – Receivables Notes Receivable Interest Receivable
8,391,672 2,808,328 10,000,000 1,200,000
11,200,000 2,500,120 2,104,608 1,765,264 1,474,360 1,225,584
9,069,936 2,130,064
9,069,936 2,130,064 10,000,000 1,200,000
Alternative 3 Carrying value Present value of future cash inflows: Principal due on 12/31/14 10M x 0.7972 7,972,000 Interest due on 12/31/13 and 12/31/14 10M x 9% = 900,000; 720,000 x 1.6901 1,521,090 Impairment loss Entry: Restructured Notes Receivable Impairment Loss – Receivables Notes Receivable
9,493,090 506,910
Cash Interest Receivable
1,200,000
10,000,000
9,493,090 506,910
10,000,000
1,200,000
Alternative 4 Carrying value Present value of future cash inflows: Principal due on 12/31/12 11.2M x 0.797193876 Interest due on 12/31/11 and 12/31/12 11.2M x 12% = 1,344,000; 1,344,000 x 1.6900510 Impairment loss
11,200,000
8,928,572
2,271,428
11,200,000 ---------
No entry for the restructuring
3-17
(Kate Company) (a) Cash Notes Payable – National Bank
750,000 750,000
22
Chapter 3 – Receivables
(b)
Current assets: Trade and other receivables (including P900,000 of accounts pledged as collateral for a loan with National Bank) P2,000,000 Current liabilities: Notes Payable – National Bank Interest Payable
3-18
P 750,000 7,500
(Lexus Company) Amount of the loan Less service charge (2% x 750,000) Net proceeds from the assignment of accounts receivable Sept. 1
Sept 1-30
P625,000 15,000 P610,000
Accounts Receivable Assigned Accounts Receivable
800,000
Cash Finance Charges Notes Payable – Pacific Bank
634,000 16,000
Cash
300,000
800,000
650,000
Accounts Receivable Assigned Sept. 30
Notes Payable – Pacific Bank Interest Expense (650,000 x 12% x 1/12) Cash
Oct. 1-31
Allowance for Uncollectible Accounts Accounts Receivable Assigned Cash
300,000 300,000 6,500 306,500 10,000 10,000 400,000
Accounts Receivable Assigned Oct.
31
31
400,000
Notes Payable – Pacific Bank Interest Expense (325,000 x 12% x 1/12) Cash
350,000 3,500
Accounts Receivable Accounts Receivable Assigned
100,000
353,500 100,000
3-19. Accord Company) July 1 1
21
Accounts Receivable Assigned Accounts Receivable
4,000,000
Cash Finance Charges Notes Payable – Bank 5% x 3,200,000 = 160,000
3,040,000 160,000
Sales Returns and Allowances Accounts Receivable Assigned
23
4,000,000
3,200,000 150,000 150,000
Chapter 3 – Receivables
July
31
Aug 1
15
Cash Sales Discounts Accounts Receivable Assigned 2% x 2,500,000 = 50,000
2,450,000 50,000
Notes Payable – Bank Interest Expense Cash 3,200,000 x 0.18 x 1/12 = 48,000
2,500,000 48,000
Allowance for Uncollectible Accounts Accounts Receivable Assigned
Aug 31
Cash Accounts Receivable Assigned
Sept 1
1
2,500,000
2,548,000 50,000 50,000 1,000,000 1,000,000
Notes Payable – Bank Interest Expense Cash 700,000 x 0.18 x 1/12 = 10,500
700,000 10,500
Accounts Receivable Accounts Receivable Assigned
300,000
710,500
300,000
4,000,000– 150,000 – 2,500,000 - 50,000 – 1,000,000 = 300,000
3 – 20 (Fortune Company) Oct. 1 1
31
Nov. 30
3-21
Accounts Receivable Assigned Accounts Receivable
2,000,000
Cash Finance Charges Notes Payable
1,440,000 90,000
2,000,000
1,500,000
Interest Expense Notes Payable Accounts Receivable Assigned
15,000 985,000
Notes Payable Interest Expense Cash Accounts Receivable Assigned
515,000 5,150 279,850
(Highlander Company) a. Sept. 1 Cash Receivable from Factor Loss from Factoring Accounts Receivable 800,000 x 10% =80,000 Loss; 720,000 x 5% = 36,000 withheld Nov. 1
Cash Finance Charges Notes Payable-Bank Payable-Ban k
1,000,000
800,000
684,000 36,000 80,000 800,000
582,000 18,000 600,000
24
Chapter 3 – Receivables
3% x 600,000 = 18,000 b. Dec. 31
3-22
10,400
(a)
Selling price of Accounts Receivable 90% x P1,200,000= Factor’s holdback (6% x 1,080,000) Cash received from factoring
P1,080,000 ( 64,800) P1,015,200
(b)
Accounts receivable assigned balance (500,000 – 350,000) Balance of notes payable to the bank 400,000 – (350,000 – 4,000) Equity on assigned accounts
P 150,000
Face value of note discounted Interest for the full term April 30 – August 28 (50,000 x 9% x 120/360) Maturity value Discount 51,500 x 10% x 88/360 Proceeds
P
( 54,000) P 96,000
P P
50,000 1,500 51,500 (1,259) 50,241
( Edsamail Company) (a)
Maturity value = 500,000 + (500,000 x .08) = 540,000 Proceeds = 540,000 – (540,000 x .10 x 5/12) = 517,500
(b)
Interest Receivable Interest Revenue 500,000 x 8% x 7/12 Cash Loss on Sale of Notes Receivable Notes Receivable Interest Receivable
3-24
10,400
(Hiku Company)
(c)
3-23
Uncollectible Accounts Expense Allowance for Uncollectible Accounts (190,000 + 1,000,000) x 2% = 23,800 – 13,400
a.
Proceeds
23,333 23,333
517,500 5,833 500,000 23,333
90,000 – (90,000 x 0.15 x 20/365)
Cash
= P89,260 89,260
Liability on Discounted Notes Receivable b.
Maturity value 75,000 + (75,000 x 0.15 x 90/365) Proceeds 77,774 – (77,774 x 0.15 x 50/365) Interest Receivable Interest Revenue
89,260 = P77,774 = P76,176 1,233 1,233
Cash
76,176 Liability on Discounted Notes Receivable
25
76,176
Chapter 3 – Receivables
c.
Maturity value 60,000 + (60,000 x 0.16 x 120/365) Proceeds 63,156 – (63,156 x 0.15 x 45/365) Interest Receivable Interest Revenue
= P63,156 = P61,988 1,973 1,973
Cash
61,988 Liability on Discounted Notes Receivable
3-25
61,988
(Crosswind Corporation) 2012
Feb. 1
Notes Receivable Accounts Receivable
April 1
60,000
Interest Receivable Rece ivable Interest Revenue 60,000 x 16% x 2/12
1
Nov. 2
30
3-26
60,000 1,600 1,600
Cash Liability on Discounted Notes Receivable 60,000 + (60,000 x .16 x 9/12) = 67,200 67,200 – (67,200 x .15 x 7/12) = 61,320
61,320
Liability on Discounted Notes Receivable Interest Expense Notes Receivable Interest Receivable
61,320 280
Accounts Receivable (67,200 + 1,500) Cash
68,700
61,320
60,000 1,600
68,700
(Explorer Company) (a) Accounts receivable factored Purchase price Purchase price of accounts receivable factored Less amount withheld as protection against returns and allowances 5% x 1,700,000 Net cash received from the factored accounts (b) Cash Receivable from Factor Loss on Factoring Accounts Receivable
P2,000,000 85%__ P 1,700,000 85,000_ P1,615,000
1,615,000 85,000 300,000 2,000,000
Sales Returns Receivable from Factor
30,000
Cash
55,000
30,000
Receivable from Factor
30,000
26
Chapter 3 – Receivables
3-27. (Nature Company) (a) 1/1/12
(a)
(b)
(c)
(d)
Interest Revenue Interest Receivable
2,800 2,800
Accounts Receivable Sales
2,800,000
Cash Sales Discounts Accounts Receivable Receivab le (2,218,000 – 180,000)* Accounts Receivable Receivab le Assigned *
2,200,000 18,000
2,800,000
Notes Receivable Accounts Receivable Receivab le
250,000
Cash Notes Receivable Interest Revenue
216,000
Interest Receivable Interest Revenue
2,800
250,000
200,000 16,000
2,800
Cash Liability on Discounted Notes Receivable (e)
(f)
(g)
(h)
(i)
2,038,000 180,000
41,400 41,400
Accounts Receivable Assigned Accounts Receivable Receivab le
300,000
Cash Finance Charges Notes Payable
222,000 18,000
300,000
240,000
Accounts Receivable Notes Receivable Interest Revenue
15,900
Allowance for Uncollectible Accounts Accounts Receivable Receivab le
12,000
15,000 900
Notes Payable Interest Expense Cash
12,000 180,000 3,000 183,000
Uncollectible Accounts Expense Allowance for Uncollectible Uncollectib le Accounts 20,000 – (12,000 – 12,000 )
(j)
Interest Receivable Interest Revenue *See item (h)
20,000 20,000
3,200 3,200
27
Chapter 3 – Receivables
(b)
Trade and Other Receivables
P876,900
Trade and Other Receivables include the following: Notes Receivable Accounts Receivable – Unassigned Accounts Receivable - Assigned Interest Receivable Allowance for Uncollectible Accounts Total MULTIPLE CHOICE QUESTIONS
P135,000 815,900 120,000 6,000 ( 20,000) P876,900
Theory MC1 MC2 MC3 MC4 MC5
A A C A A
MC6 MC7 MC8 MC9 MC10
A C C C A
MC11 MC12 MC13 MC14 MC15
C A D A C
Problems MC16
B
MC17
D
MC18
C
MC19 MC20
B A
MC21 MC22 MC23 MC24
D D C D
MC25 MC26
B B
MC27
A
MC28 MC29 MC30
A B D
MC31
C
MC32 MC33
C C
450,000 x 1.4 = 630,000 630,000 – 585,000 = 45,000 105,000 x .90 = 94,500 (Invoice price/Gross) 94,500 x .98 = 92,610 (net price) 200,000 x .90 x .95 = 171,000 (Invoice price/Gross) 171,000 x .97 = 165,870 (Net) 1,300,000 + 5,400,000 + 25,000 – 4,750,000 – 125,000 = 1,850,000 360,000 ÷ 80% = 450,000 450,000 + 80,000 – 430,000 = 100,000 75,000 + 45,000 = 120,000 3% x 1,000,000 = 30,000 30,000 + 8,000 = 38,000 270,000 – 250,000 = 20,000 20,000 + 23,000 – 28,000 – 5,000 = 10,000 17,500 – 30,500 + 8,050 + 200,000 = 15,050 480,000 + 2,400,000 – 2,560,000 – 17,600 – 36,800* + 4,800 = 270,400 *1,411,200 ÷ .98 = 1,440,000 x 2% = 28,800 792,000 ÷ .99 = 800,000 x 1% = 8,000 28,800 + 8,000 = 36,800 19,200 + 4,800 – 17,600 = 6,400 5% x 270,400 = 13,520 13,520 – 6,400 = 7,120 (5% x 600,000) + (10% x 40,000) + 14,000 = 48,000 20,000 + 7,500 – 12,500 – 3,700 = 11,300 50,000 + (50,000 x 10%) = 55,000 55,000 – (55,000 x .12 x 6/12) = 51,700 400,000 x .75 = 300,000 300,000 x 10% = 30,000 300,000 + 30,000 = 330,000 1,940,000 x 13.4% x 1/12= 21,663
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Chapter 3 – Receivables
MC34
B
MC35 MC36
B B
MC37 MC38 MC39 MC40
D C A D
2,000,000 x 12% x 1/12 = 20,000 (Note: The difference between interest income of P21,333 and interest receivable of 20,000 is debited to Discount on Notes Receivable). 500,000 x 8% x 4/12 = 13,333 1,250,000 - (2% x 1,250,000)} = 1,225,000 1,225,000 + 695,000 = 1,920,000 (500,000 + 2,200,000) x 3% = 81,000; 81,000 – 32,000 = 49,000 550,000 – [(500,000 x 0.8265) + (40,000 x 1.7355)] = 67,380 5,500,000 – [(4,000,000 X .83) + (320,000 X 1.74)] = 1,623,200 (4,000,000 X .83) + (320,000 X 1.74) = 3,876,800
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