ADDITIONAL  PRACTICE  PROBLEMS  –  A/R  AND  ESTIMATION  OF  ALLOWANCE  FOR  BAD  DEBTS  
 
GENERAL  INSTRUCTION:  Show  all  necessary  solutions  and  box  or  highlight  your  final  answers.  
 
PROBLEM  #1  
MM  Company  reported  the  following  balances  after  adjustment  at  year-­‐end:  
    2019     2018  
Accounts  receivable     4,725,000     4,320,000  
Net  realizable  value     4,590,000     4,252,500  
During  2019,  the  entity  wrote  off  customer  accounts  totaling  P144,000  and  collected  P36,000  on  accounts  written  off  in  previous  years.  What  amount  should  
be  reported  as  doubtful  accounts  expense  for  the  year  ended  December  31,  2019?  
 
PROBLEM  #2  
ZZ  Company  provided  the  following  information  for  the  current  year  in  relation  to  accounts  receivable:  
Accounts  receivable,  January  1   1,950,000  
Credit  sales   8,250,000  
Sales  return   225,000  
Accounts  written  off   150,000  
Collections  from  customers   7,500,000  
Estimated  future  sales  return  on  December  31   75,000  
Estimated  uncollectible  accounts  per  aging  at  year-­‐end   375,000  
REQUIRED:  What  amount  should  be  reported  as  net  realizable  value  of  accounts  receivable  on  December  31?  
 
PROBLEM  #3  
EE  Company  reported  the  following  data  at  year-­‐end:  
Sales   12,800,000  
Accounts  receivable   3,200,000  
Allowance  for  doubtful  accounts  –  January  1   160,000  
Accounts  written  off   208,000  
Recovery  of  accounts  previously  written  off   32,000  
REQUIRED:  Under  each  method:  a)  Prepare  adjusting  entry  for  doubtful  accounts  b)  Compute  for  doubtful  accounts  expense  for  the  year  c)  Compute  for  the  
net  realizable  value  (NRV)  of  A/R  
i. Percentage  of  sales  –  estimate  is  3%  
ii. Percentage  of  accounts  receivable  –  estimate  is  8%  
iii. Aging  of  accounts  receivable  –  estimate  is  P320,000  
 
PROBLEM  #4  
On  January  1,  2019,  NN  Company  showed  the  following  account  balances:  
Accounts  receivable   500,000  
Allowance  for  doubtful  accounts   20,000  
The  following  summary  transactions  occurred  during  the  current  year:  
a)  Sales  on  account,  2/30,  n/30   3,500,000  
b)  Collections  from  customers  within  the  discount  period   1,225,000  
c)  Collections  from  customers  beyond  the  discount  period   1,950,000  
d)  Accounts  receivable  written  off  as  worthless   15,000  
e)  Recovery  of  accounts  previously  written  off  not  included  in  the  above  collections   5,000  
f)  Credit  memo  for  sales  return   35,000  
REQUIRED:  a)  How  much  is  the  accounts  receivable  as  of  December  31,  2019?  b)  Prepare  the  adjusting  entry  for  doubtful  accounts  on  December  31,  2019  if  
the  entity  uses  the  percentage  of  accounts  receivable  method  consistently.  c)  What  is  the  net  realizable  value  of  accounts  receivable  on  December  31,  2019?    
 
PROBLEM  #5  
FF  Company  provided  the  following  information  for  the  current  year:  
Sales  (all  on  credit)   11,400,000  
Sales  discount   1,200,000  
Sales  returns  and  allowances   600,000  
Allowance  for  doubtful  accounts  –  January  1   240,000  
Accounts  written  off  as  uncollectible   120,000  
Recovery  of  accounts  written  off   60,000  
The  entity  recorded  doubtful  accounts  expense  at  the  rate  of  5%  of  net  credit  sales.  What  amount  should  be  reported  as  allowance  for  doubtful  accounts  on  
December  31?  
 
PROBLEM  #6  
Chocolatey  Company’s  accounts  receivable  subsidiary  ledger  shows  the  following  information:  
  Account  Balance     Invoice     Invoice  Amount  
Customer   Dec.  31,  2018   Date  
Hersheys     P  35,180     12/06/19     P  14,000  
        11/29/19     21,180  
Meiji     20,920     09/27/19     12,000  
        08/20/19     8,920  
Snickers     30,600     12/08/19     20,000  
        10/25/19     10,600  
KitKat     31,600     12/12/19     19,200  
        12/02/19     12,400  
Ferrero     17,400     09/12/19     17,400  
Goya     45,140     11/17/19     23,140  
        10/09/19     22,000  
 
The  estimated  bad  debt  rates  below  are  based  on  the  company’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,  2019,  before  adjustment.  
 

REQUIRED:  a)  Accounts  receivable  aging  schedule,  as  of  12/31/19.  b)  Computation  of  required  allowance  for  2019  (Show  ALL  necessary  amounts.)  c)  Journal  
entry  to  adjust  the  allowance  account  (when  necessary)  d)  Net  realizable  value  of  the  company’s  accounts  receivable  as  of  December  31,  2019.