RECEIVABLES

PROBLEM NO. 1
In your December 31, 2019, the accounts receivable control account of Alilem Company had a balance of
P2,865,000. An analysis of the accounts receivable account showed the following:
Accounts known to be worthless P 37,500
Advance payments to creditors on purchase orders 150,000
Advances to affiliated companies 375,000
Customers’ accounts reporting credit balances arising from sales return
(225,000)
Interest receivable on bonds 150,000
Other trade accounts receivable – unassigned 750,000
Subscriptions receivable for common stock due in 30 days 825,000
Trade accounts receivable - assigned (Finance company’s equity in assigned
accounts is P150,000) 375,000
Trade installment receivable due 1 – 18 months, including unearned finance
charges of P30,000 330,000
Trade receivables from officers due currently 22,500
Trade accounts on which post-dated checks are held (no entries were made on
receipts of checks) 75,000
P2,865,000

Questions:

Based on the above, determine the adjusted balance of following:

1. The trade accounts receivable as of December 31, 2019 is

a. P1,147,500 c. P1,485,000
b. P1,522,500 d. P1,447,500

2. The current trade and other receivables net as of December 31, 2019 is
a. P2,647,500 c. P2,272,500
b. P2,610,000 d. P1,822,500

3. How much of the foregoing will be presented under noncurrent assets as of December 31, 2019?
a. P1,200,000 c. P525,000
b. P 375,000 d. P 0

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PROBLEM NO. 2
Banayoyo Corporation for the year ended December 31, 2019 revealed that the Accounts Receivable
account consists of the following:
Trade accounts receivable (current) P3,440,000
Past due trade accounts 640,000
Uncollectible accounts 128,000
Credit balances in customers’ accounts (80,000)
Notes receivable dishonored 240,000
Consignment shipments – at cost
The consignee sold goods costing P96,000 for P160,000. A 10%
commission was charged by the consignee and remitted the balance to
Banayoyo. The cash was received in January, 2020. 320,000
Total P4,688,000

The balance of the allowance for doubtful accounts before audit adjustment is a credit of P80,000. It
is estimated that an allowance should be maintained to equal 5% of trade receivables, net of amount
due from the consignee who is bonded. The company has not provided yet for the 2019 bad debt
expense.

Questions:
Based on the above, determine the adjusted balance of following:
1. Trade accounts receivable
a. P4,080,000 c. P4,464,000
b. P3,440,000 d. P3,584,000
2. Allowance for doubtful accounts
a. P204,000 c. P172,000
b. P216,000 d. P179,200
3. Doubtful accounts expense
a. P264,000 c. P252,000
b. P220,000 d. P227,200

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PROBLEM NO. 3
Presented below are a series of unrelated situations. Answer the following questions relating to each
of the independent situations as requested.
1. Bantay Company’s unadjusted trial balance at December 31, 2019, included the following
accounts:
Debit Credit
Accounts receivable P1,000,000
Allowance for doubtful accounts 40,000
Sales P15,000,000
Sales returns and allowances 700,000

Bantay Company estimates its bad debt expense to be 1 1/2% of net sales. Determine its bad
debt expense for 2019.
a. P225,000 c. P214,500
b. P254,500 d. P 55,000

2. An analysis and aging of Burgos Corp. accounts receivable at December 31, 2019, disclosed the
following:
Amounts estimated to be uncollectible P 1,800,000
Accounts receivable 17,500,000
Allowance for doubtful accounts (per books) 1,250,000
What is the net realizable value of Burgos’ receivables at December 31, 2019?
a. P15,700,000 c. P16,250,000
b. P17,500,000 d. P14,450,000

3. Cabugao Company provides for doubtful accounts based 3% of credit sales. The following data
are available for 2019.
Credit sales during 2019 P21,000,000
Allowance for doubtful accounts 1/1/19 170,000
Collection of accounts written off in prior years (Customer credit was
reestablished) 80,000
Customer accounts written off as uncollectible during 2019 300,000

What is the balance in allowance for doubtful accounts at December 31, 2019?
a. P630,000 c. P500,000
b. P420,000 d. P580,000

4. At the end of its first year of operations, December 31, 2019, Caoayan, Inc. reported the
following information:
Accounts receivable, net of allowance for doubtful accounts P9,500,000
Customer accounts written off as uncollectible during 2019 240,000
Bad debts expense for 2019 840,000

What should be the balance in accounts receivable at December 31, 2019, before subtracting
the allowance for doubtful accounts?
a. P10,100,000 c. P 9,740,000
b. P10,340,000 d. P10,580,000

5. The following accounts were taken from Cervantes Inc.’s balance sheet at December 31, 2019.
Debit Credit
Accounts receivable P4,100,000
Allowance for doubtful accounts 100,000
Net credit sales P7,500,000

If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be
reported for 2019.
a. P123,000 c. P223,000
b. P 23,000 d. P225,000

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PROBLEM NO. 4
The adjusted trial balance of Galimuyod Company as of December 31, 2018 shows the following:
Debit Credit
Accounts receivable P1,000,000
Allowance for bad debts P40,000

Additional information:
 Cash sales of the company represents 10% of gross sales.
 90% of the credit sales customers do not take advantage of the 2/10, n/30 terms.
 It is expected that cash discount of P6,000 will be taken on accounts receivable outstanding at
December 31, 2019.
 Sales returns in 2019 amounted to P400,000. All returns were from charge sales.
 During 2019, accounts totaling to P44,000 were written off as uncollectible; bad debt recoveries
during the year amounted to P3,000.
 The allowance for bad debts is adjusted so that it represents certain percentage of the outstanding
accounts receivable at year end. The required percentage at December 31, 2019 is 150% of the
rate used on December 31, 2018.

Questions:
Based on the above answer the following:
1. The accounts receivable as of December 31, 2019 is
a. P3,000,000 c. P 333,333
b. P 300,000 d. P2,444,000
2. The allowance for doubtful accounts as of December 31, 2019 is
a. P 20,000 c. P180,000
b. P120,000 d. P146,640
3. The net realizable value of accounts receivable as of December 31, 2019 is
a. P 307,340 c. P2,874,000
b. P2,814,000 d. P2,291,360
4. The doubtful account expense for the year 2019 is
a. P181,000 c. P 21,000
b. P121,000 d. P147,640

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PROBLEM NO. 5
In your audit of Lidlidda Plastic Products Co., you noted that the company’s balance sheet shows
the accounts receivable balance at December 31, 2018 as follows:
Accounts receivable P3,600,000
Allowance for doubtful accounts 72,000
P3,528,000

During 2019, transactions relating to the accounts were as follows:

 Sales on account, P38,400,000.
 Cash received from collection of current receivable totaled P31,360,000, after discount of
P640,000 were allowed for prompt payment.
 Customers’ accounts of P160,000 were ascertained to be worthless and were written off.
 Bad accounts previously written off prior to 2005 amounting to P40,000 were recovered.
 The company decided to provide P184,000 for doubtful accounts by journal entry at the end of the
year.
 Accounts receivable of P5,600,000 have been pledged to a local bank on a loan of P3,200,000.
Collections of P1,200,000 were made on these receivables (not included in the collections previously
given) and applied as partial payment to the loan.

Questions:
Based on the above, answer the following:
1. The accounts receivable as of December 31, 2019 is
a. P8,680,000 c. P4,240,000
b. P9,840,000 d. P8,640,000
2. The allowance for doubtful accounts as of December 31, 2019 is
a. P 8,000 c. P184,000
b. P136,000 d. P176,000
3. The net realizable value of accounts receivable as of December 31, 2019 is
a. P8,544,000 c. P8,504,000
b. P8,456,000 d. P4,104,000
4. If receivables are hypothecated against borrowings, the amount of receivables involved should be
a. Disclosed in the statements or notes
b. Excluded from the total receivables, with disclosure
c. Excluded from the total receivables, with no disclosure
d. Excluded from the total receivables and a gain or loss is recognized between the face value
and the amount of borrowings

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PROBLEM NO. 6
Unless otherwise identified, the notes receivable of the Quirino Company on December 31, 2019, were
trade notes receivable. On this date the balance of the account, P3,036,915, consisted of the following notes
all received during the calendar year under audit:

Maker Date Term Rate Amount Remarks

A Co. Oct. 1 6 mos. 18% P 57,416 Four notes to settle
Oct. 1 12 mos. 18% 100,000 past due account.
Oct. 1 18 mos. 18% 100,000 Current billings are
Oct. 1 24 mos. 18% 100,000 on a 10 – day credit
basis.
B Co. July 1 36 mos. 18% 500,000 This note is for a
cash loan made to
this customer. No
interest has been
collected to date.
C Co. Oct. 1 4 mos. 15% 251,636 All interest collected
on Oct. 1.
Mr. Pogi Feb. 1 Demand 18% 1,000,000 Loan approved in
(Company minutes book, Jan.
President) 20. On Aug. 1 this
note was pledged as
collateral for a bank
loan P500,000.
D Co. Nov. 1 12 mos. 15% 546,387 Interest payable at
maturity
E, Inc. Dec. 90 days 18% Interest payable at
10 381,476 maturity
P3,036,915

All of the above notes are considered good except that of A Company which is somewhat doubtful. An
allowance of 25% should be established against the notes receivable of this company.

QUESTIONS:
Based on the above, compute the following:
1. Adjusted balance of Trade Notes Receivable as of December 31, 2019
a. P1,179,499 c. P2,036,915
b. P 927,863 d. P1,536,915
2. Net realizable value of Trade Notes Receivable as of December 31, 2019
a. P1,447,561 c. P1,090,145
b. P1,947,561 d. P 838,509
3. Interest income for the year ended December 31, 2019
a. P243,749 c. P208,185
b. P253,185 d. P 43,185
4. Accrued interest income as of December 31, 2019
a. P253,185 c. P243,749
b. P 78,749 d. P198,749

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PROBLEM NO. 7
In connection with Salcedo Corporation, you noted that the company’s Notes Receivable consists of
the following:
a. A 4-month note dated November 30, 2019, from AA Company, P200,000; interest rate, 16%;
discounted on November 30, 2019 at 16%.
b. A draft drawn payable 30 days after for P900,000 by the BB Company on the Charlie Company in
favor of the Delta Company, endorsed to Salcedo Corp. on December 2, 2019 and accepted on
December 4, 2019.
c. A 90-day note dated November 1, 2019 from E. Dy, P500,000; interest at 16%; the note is for
subscription to 5,000 shares of the preferred stock of Salcedo Corp. at P100 per share.
d. A 60-day note dated May 3, 2019, from CC Company, P600,000; interest rate, 16%; dishonored at
maturity; judgment obtained on October 10, 2019. Collection within the next twelve months is
doubtful.
e. A 90-day note dated January 4, 2019, from Apol Bobads, president of Salcedo, P160,000; no interest;
note not renewed; president confirmed.
f. A 120-day note dated September 14, 2019, from DD Company, P120,000; interest rate, 16%; note
is held by bank as collateral.

QUESTIONS:
Based on the above, you are to provide the answers to the following:
1. The adjusted balance of Notes Receivable as of December 31, 2019 is
a. P2,480,000 c. P1,020,000
b. P1,220,000 d. P 900,000
2. How much of foregoing notes receivable will be reported in the current assets section of the
balance sheet?
a. P1,220,000 c. P1,680,000
b. P2,480,000 d. P1,520,000
3. How much is the net interest income from the foregoing notes receivable for 2019?
a. P19,093 c. P166,613
b. P70,613 d. P 35,093
4. The adjusted balance of Interest Receivable as of December 31, 2019 is
a. P19,093 c. P70,613
b. P 5,760 d. P0