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CHAPTER 4 ACCOUNTS RECEIVABLE TECHNICAL KNOWLEDGE To know the classification and presentation of Pere vables To know the initial and subsequent measurement of accounts receivable. To identify the adjustments necessary in determining the net realizable value of accounts receivable. To understand the gross method and net method of recording credit sales. To know the accounting for doubtful accounts, worthless accounts written off and recoveries of accounts written off. 113 aa emma AP 5 = Ne TRADE AND NONTRADE RECEIVABLES Trade receivables refer to claims arising from 8ale merchandise or services in the ordinary course of busines! 8, Trade receivables include accounts receivable and note receivable. * Accounts receivable are open accounts arising from the Sale of goods and services in the ordinary course of business and not supported by promissory notes. Other names of accounts receivable are customers’ accounts trade debtors, and trade accounts receivable. Notes receivable are those supported by formal promises to pay in the form of notes. Nontrade receivables represent claims arising from sources other than the sale of merchandise or services in the ordinary course of business. Classification Trade receivables which are expected to be realized in cash within the normal operating cycle or one year, whichever is longer, are classified as current assets. Nonirade receivables which are expected to be realized in cash within oné year, the length of the operating cycle notwithstanding, are classified as current assets. If collectible beyond one year, nontrade receivables are classified as noncurrent assets. ‘The classifications are in accordance with PAS 1, Presentation of Financial Statements, paragraph 66, which states: “An entity shall classify an asset as current when the entity _ expects to realize the asset or intends to sell or consume it in the entity's normal operating cycle, or when the entity expects to realize the asset within twelye months after the reportin€ period.” 114 a presentation ivables and nontrad i i rade receival © receivables which are currently collectible shall be Presented on the face of the statement: of financial position as one line item called trade and other receivables, However, the details-of the tot; i 2 al trade and other receivables shall be disclosed in the notes t ‘0 financial statements, ccounts receivable " ‘AMlowance for doubtful accounts Peisnercenh Notes receivable 1,000) ‘000 Accrued interest on note receivable 150,000 ‘Advances to officers and employees : 100,000 Dividends receivable BO G00 Total trade and other receivables 6, Examples of nontrade receivables a. Advances to or receivables from shareholders, directors, officers or employees. If collectibl le in one year, such advances or receivables should be classified as current assets. Advances to affiliates are noncurrent investments. Advances to supplier are current assets. d.. Subscriptions receivable s! a deduction from subs: collectible currently. should be shown preferably as cribed share capital unless Creditors’ accounts with debit balances as a result of overpayment or returns and allowances are classified as clrrent assets. Special deposits on contract bids normally are classified as noncurrent assets because such deposits are likely to remain outstanding for a considerable long period of time. Dividend receivable, accrued rent receivable, accrued Toyalties receivable and accrued interest receivable are Usually classified as current assets. Claims receivable such as claims against common carriers for lossés or damages, claim for rebates and tax tefunds are normally classified as current assets. 115 Customers’ credit balances Customers’ credit balances are credit balances in a, un receivable resulting from overpayments, return, a allowances, and advance payments from customers. Customers’ credit balances are classified as current liabjy;,, and are not offset against the debit balances in other custome, accounts, except when the same is not material in which only the net accounts receivable may be presented. “ate For example, the accounts receivable controlling account reports a balance of P500,000. Examination of the subsidiary ledgers reveals the following details in the customers’ accounts: Customer A 400,000 Customer B 150,009 Customer C (50,009) _) Accounts receivable control 500,000 = The credit balance in the account of Customer C resulted from overpayment. Understandably, this credit balance in the account of Customer Cis a liability of the entity to Customer C. The accounts receivable should be presented as current asset at P550,000 representing the accounts of A and B. The credit balance in the account of C is classified as current liability and not offset against the debit balances in the accounts of A and B. No adjustment is necessary to formally recognize the customers) credit balances because ultimately the credit balances are canceled for sales and cash settlement. But an adjustment may be made only for worksheet purposes, meaning, not formally journalized and posted to the ledger. Accounts receivable 50,000 Customers’ credit balances 50,000 116 Jnitial measurement of accounts receivable pFRS 9, paragraph 5.1.1, provides that a financial asset shall be recognized initially at fair value plus transaction costs that are directly attributable to the acquisition. The fair value of a financial asset is usually the transaction price, meaning, the fair value of the consideration given. For short-term receivables, the fair value is equal to the face amount or original invoice amount. Cash flows relating to short-term receivables are not discounted because the effect of discounting is usually immaterial. Accordingly, accounts receivable shall be measured initially at face amount or original invoice amount. With respect to accounts receivable, transaction costs are not normally incurred because the accounts simply arise from the act of selling goods in the ordinary course of business. | Subsequent measurement In accordance with PFRS 9, paragraph 5.2.1, after initial recognition, accounts receivable shall be measured at amortized cost. The amortized cost is actually the net realizable value of accounts receivable. The term amortized cost has more relevance in long-term note receivable. Thus, the term net realizable value is preferably used in lation to accounts receivable. The net realizable value of accounts receivable is the amount cmon expected to be collected or the estimated recoverable 117 a The initial amount recognized for accounts receivable gh, be reduced by adjustments which in the ordinary course » business will reduce the amount recoverable from the customer. : Net realizable value This is based on the established basic principle that asso, shall not. be carried at above their recoverable amount. : mating the net realizable value of trad, Accordingly, in esti! é the following deductions are made: accounts receivable, a. Allowance for freight charge pb. Allowance for sales return ¢. Allowance for sales discount d. Allowance for doubtful acccounts Terms related to freight charge In order to give proper accounting recognition to freight charge in relation to accounts receivable, the following terms should be understood — FOB destination, FOB shipping point, freight collect and freight prepaid.” The term FOB destination means that ownership of the goods purchased is vested in the buyer upon receipt thereof. Accordingly, the seller shall be responsible for the freight charge up to the point of destination. The term FOB shipping point means that ownership of the goods purchased 1s vested in the buyer upon shipment thereof. Thus, it is incumbent upon the buyer to pay for the transportation charge from the point of shipment to the point of destination. The term freight collect means that freight charge on the goods shipped is not yet paid. The common carrier shall collect the same from the buyer. Thus, under this, the freight charge 1 actually paid by the buyer. The term freight prepaid mears that freight charge on the -oods shipped is already paid by the seller. 118 Accounting for freight charge Sometimes, goods are sold FOB destinas; . feat callecvith the understanting fat ae peed for the freight charge and d y pay Penedatbyibtic’ educt the same when remittance On the part of the seller, the freight charge i fi . ‘ge is recorded b: debiting freight out and crediting allowance for freight charge. For example, an entity has a P100,000 account receivable at the end of accounting period. The terms are 2/10, n/30, FOB destination and freight collect. The customer paid freight charge of P5,000. 1, To record the sale: Accounts receivable 100,000 Freight out 5,000 Sales 100,000 Allowance for freight charge 5,000 2. To record the collection within the discount period: Cash 93,000 Sales discount 2,000 Allowance for freightcharge 5,000 Accounts receivable 100,000 Allowance for sales returns The measurement of accounts receivable shall also recognize the probability that some customers will return goods that are unsatisfactory or will make other claims requiring reduction in the amount due as in the case of shipment shortages and defects. For example, an amount of P50,000 of the total accounts receivable at year-end represents selling price of goods that will probably be returned. The journal entry to recognize the Probable return is: Sales return 50,000 "Allowance for sales return 50,000 119 Sales discount Entities usually offer cash discounts to credit customers cash discount is a reduction from an invoice price by reas of prompt payment. A cash discount is known as sales discount on the part of the seller and a purchase discount on the part of the buyer, A cash discount may be expressed as 5/10, n/30. Thi, means that the customer is entitled to a 5% discount j¢ payment is made in 10 days from the invoice date. If the customer fails to pay within the 10-day discount period, the gross amount of the invoice price must be paid within 39 days from the invoice date. Methods of recording credit sales a. Gross method — The accounts receivable and sales are recorded at gross amount of the invoice. The gross method is the common and widely used method because it is simple to apply. b. Net method — The accounts receivable and sales are recorded at net amount of the invoice, meaning the invoice price minus the cash discount whether taken or not taken. Illustration — Gross method 1. Sale of merchandise for P100,000, terms 5/10, n/30. Accounts receivable 100,000 Sales 100,000 2, Assume collection is made within the discount period. Cash 95,000 Sales discount 5,000 ‘Accounts receivable 100,000 3. Assume collection is made beyond the discount period. Cash 100,000 ‘Accounts receivable 100,000 120 jilustration — Net method 4, Sale of merchandise for P100,000, terms 5/10, n/ 30. Accounts receivable Sales t 95,000 9, Assume collection is made within the discount period. Cash 95,000 ‘Accounts receivable 95,000 3, Assume collection is made beyond the discount period. Cash : 100,000 Accounts receivable 95,000 Sales discount forfeited 5,000 The sales discount forfeited account is classified as other income. Allowance for sales discount Ifcustomers are granted cash discounts for prompt payment, then, conceptually estimates of cash discounts on open accounts at the end of the period based on past experience shall be made. For example, of the accounts receivable of P1,000,000 at the end of the period, it is reliably estimated that discounts to be taken will amount to P50,000. : The adjustment to record the expected sales discount is: Sales discount 50,000 Allowance for sales discount é 50,000 The adjustment may be reversed at the beginning of the next Period in order that diecounts can then be charged normally sales discount account. 121 a Accounting for bad debts dit rather than only for cash t, Business entities sell on cre by increase income. increase total sales and there that sells on credit assumes the risk that However, an entity I 1 not pay their accounts. some customers wil When an account becomes uncollectible, the entity has sustained a bad debt loss. This loss is simply one of the costs of doing business on credit. Two methods are followed in accounting for this bad debt loss, namely: 1, Allowance method 2 Direct writeoff method Allowance method The allowance method requires recognition of a bad debt loss if the accounts are doubtful of collection. The journal entry to recognize the doubtful accounts is: Doubtful accounts XX ‘Allowance for doubtful accounts xXx The “allowance for doubtful accounts” is deduction from accounts receivable. If the doubtful accounts are subsequently found to be worthless, the accounts are written off as uncollectible. ‘Allowance for doubtful accounts e Accounts receivable xx Generally accepted accounting principles require the use of the allowance method because it conforms with the matching principle. Moreover, accounts receivable would be pro, ured at net realizable value. peppery, mere 122 Recoveries of accounts written off If a collection is made on account previously written ff as uncollectible, the customary proce, ure is first to Pacha the customer's account with the amount collected and Sasha the entire amount previously charged off if it is us ted. that collection will be received in full. havc The collection is then recorded : normalh iti crediting accounts receivable, Y by debiting cash and The rechareine of ne cenremiet account is usually followed because it is an evidence of the attempt of ¢ reestablish his credit with the entity, Fh caine What account should be credit ae ed when the customer's account is rechargea' The generally accepted approach is to simply reverse the original entry of writeoff regardless of whether the recovery is during the year of writeoff or subsequent thereto, Illustration - Allowance method 1, Accounts of P30,000 are considered doubtful of collection, Doubtful accounts 30,000 Allowance for doubtful accounts 30,000 2. The accounts are subsequently discovered to be worthless or uncollectible. Allowance for doubtful accounts , 30,000 Accounts receivable 30,000 3. The same accounts that are previously written off are unexpectedly recovered or collected. Rovewre ppfryy Accounts receivable 30,000 Allowance for doubtful accounts 30,000 Cash 7 30,000 Accounts receivable , 30,000 The effect of the recovery of accounts written off is zero on accounts receivable because the recharging and collection are offsetting, However, the allowance for doubtful accounts 8 increased by the recovery. 128 ) >) Direct writeoff method The direct writeoff method requires recognition of a baq de loss only when the accounts proved to be worthles. bt uncollectible. oy Worthless accounts are recorded by debiting bad debts an crediting accounts receivable. If the accounts are only doubtful collection, no adjustment is necessary. This approach is often used by small businesses because itis simple to apply. ‘As a matter of fact the Bureau of Internal Revenue recognizes only this method for income tax purposes. However, the direct writeoff method violates the matching principle because the bad debt loss is often recognized in later accounting period than the period in which the sales revenue was recognized. The direct writeoff method is not permitted under IFRS. Illustration - Direct writeoff method 1. Accounts of P30,000 are considered doubtful of collection. No entry is necessary. 2. The accounts proved to be worthless. Bad debts 30,000 Accounts receivable } 30,000 3. The same accounts that are previously written off a8 worthless are recovered or collected. Accounts receivable 30,000 Bad debts 30,000 30,000 Accounts receivable 30,000 ‘If the recovery is subsequent to the year of writeoff and the direct writeoff method is used, the recovery may simply be credited to other income. 124 QUESTIONS 1. Define receivables. 2. Explain the classification and presentation of receivable in the statement of financial position 3. Explain the treatment of customers’ credit balances, 4, Explain the initial and subsequent measurement of trade accounts receivable. 5. Explain the two methods of recording accounts receivable and credit sales. 6, Explain the allowance method of accounting for bad debts, 7. Explain the direct writeoff emthod of accounting for bad debts. 8. Give the proforma entry under the allowance method for each of the following: a. Doubtful accounts b. Accounts receivable proved to be worthless c. Recovery of accounts previously written off 9. Give the proforma entry under the direct writeoff method for each of the following: a. Doubtful accounts b. Accounts receivable proved to be worthless c, Recovery of accounts previously written off 10. Explain the presentation of doubtful accounts in the income statement. 126 pROBLEMS problem 4-1 (IAA) Dreamer Company reported the “Receivables” account with a debit balance of P2,000,000 at year-end. The allowance for doubtful accounts had a credit balance of P50,000 on same date. Subsidiary details revealed the following: Trade accounts receivable 775,000 ‘Trade notes receivable 100,000 Installments receivable, normally due lyeartotwoyears 300,000 Customers’ accounts reporting credit balances arising from sales return (30,000) Advance payments for purchase of merchandise 150,000 Customers’ accounts reporting credit balances arising from advance payments (20,000) Cash advance to subsidiary 400,000 Claim from insurance entity 15,000 Subscriptions receivable due in 60 days 300,000 Accrued interest receivable 10,000 2,000,000 Required: a. Prepare one compound entry to reclassify the receivables account. . Compute the amount to be presented as “trade and other receivables” under current assets. Indicate the classification and presentation of the other items excluded from “trade and other receivables”. 127 Problem 4-2 (IAA) Credible Company provided the following T-accoun, summarizing the transactions affecting the accounts Teceivahi, for the current year: ; Accounts Receivable Jan. 1 balance 600,000 | Collections from customers 5,300,099 Charge sales 6,000,000] Writeoff 35,009 Shareholders’ Merchandise returns 40,000, subscriptions 200,000| Allowances to customer Deposit on contract 120,000] forshipping damages 25,09 Claims against common Collectipns on carrier claims 40,099 carrier fordamages 100,000|Collection on subscriptions 50,009 10Us from employees 10,000 Cash advance to affiliates 100,000 ‘Advances toa supplier 50,000 Required: a. Compute the correct amount of accounts receivable. b. Prepare one compound entry to adjust the accounts receivable. ¢. Compute the amount to be presented as “trade and other receivables” under current assets. d. Indicate the classification and presentation of the other items. Problem 4-3 (ACP) Affectionate Company sold merchandise on account for 500,000. The terms are 3/10, n/30. The related freight charge amounted to P10,000. The account was collecte! within the discount period. Required: Prepare journal entries to record the transactions under the following freight terms: FOB destination and freight collect FOB destination and freight prepaid FOB shipping point and freight collect FOB shipping point and freight prepaid Pete 128 problem 4-4 (ACP) Fiancee Company records sales return during the year as a voait to accounts receivable. o However, at the end of the accounting period, the entity estimates the probable sales return and records the same by means of an allowance account. The following transactions occurred in summary form: 1. Sale of merchandise on account, 2/10,n/30 4,000,000 2, Collection within the discount period 1,470,000 3. Collection beyond the discount period 1,000,000 4, Sales return granted 100,000 5. Sales return estimated at the end of the year 20,000 Required: Prepare journal entries to record the transactions. Problem 4-5 (IAA) On June 15, 2021, Romela Company sold 100 air conditioning units. The sale price for each unit is P45,000. All of sales are subject to terms 2/10, n30. The entity used the gross method of accounting for accounts receivable. Required: - Prepare journal entry to record the sale. . Prepare journal entry to record receipt of the payment Assuming the correct amount was received on June 25, 2021. . Prepare the journal entry to record receipt of the payment Assuming the correct amount was received on July 10, 2021. 129 Problem 4-6 (IAA) On February 14, 2021, Prime Company sold 59 . a conditioning units. The sale price for each unit is P50,009° All of the sales are sujbect to terms 2/10, n30. The eng; used the net method of accounting for accounts receivable Required: 1. Prepare the journal entry to record the sale. 2. Prepare the journal entry to record receipt of the paymen, assuming the correct amount was received on February 24, 2021. 3. Prepare the journal entry to record receipt of the payment, assuming the correct amount was received on March. 10, 2021. Problem 4-7 (IAA) During the current year, Raven Company started business. Sales for the first year totaled P4,000,000. The entity priced its merchandise to yield a 40% gross profit based on sales. Industry statistics suggest that 10% of the merchandise sold to customers will be returned. The entity estimated sales returns based on the industry average. During the current year, customers returned goods with sale price of P300,000. Required: Prepare journal entries to record sales, sales returns an the year-end adjusting entry for estimated sales returns. 130 problem 4-8 (AICPA Adapted) Valiant Company reported the follo receivables at year-end: wing analysis of current Trade accounts receivable ‘Allowance for doubtful accounts Eto Claim against shipper for goods lost 700,000) in transit in November Selling price of unsold goods sent by Ses Valiant on consignment at 150% of cost and not included in ending inventory Security deposit on lease of warehouse SOG Total 3,000,000 What total amount should be reported as current trade and other receivables? 2,200,000 2,400,000 2,300,000 3,000,000 Problem 4-9 (AICPA Adapted) Jinx Company provided the following information for the current year in relation to accounts receivable: pose Accounts receivable, January 1 1,300,000 Credit sales 5,500,000. Sales return 150,000 Accounts written off 100,000 Collections from customers 5,000,000 Estimated future sales return on December 31 50,000 Estimated uncollectible accounts per aging at: year-end 250,000 reported as net realizable value of What amount should be 31? accounts receivable on December 1,550,000 1,250,000 1,300,000 . 1,500,000 eee Problem 4-10 (AICPA Adapted) Rapture Company had the following information fo, current year relating to accounts receivable: Accounts receivable, January 1 Credit sales Collections from customers, excluding recovery Accounts written off Collection of accounts written off in prior year, customer credit was not reestablished Estimated uncollectible receivables per aging at December 31 SS the 1,300, 5.400 90 4,750,009 125,009 25,000 165,004 What amount should be reported as accounts receivah|, before allowance for doubtful accounts on December 31? pee Problem 4-11 (PHILCPA Adapted) 1,825,000 1,850,000 1,950,000 1,990,000 At year-end, Harem Company reported accounts receivable of P8,200,000 with the following analysis: Accounts known to be worthless ‘Advance payments on purchase orders Advances to subsidiary Customers’ accounts reporting credit balances arising from sales returns ‘Trade accounts receivable Subscription receivable due in 30 days Trade installments receivable due 1-18 months, including unearned finance charge of P50,000 ‘Trade accounts receivable from officers, due currently ‘Trade accounts on which postdated checks are held and no entries were made on receipt of checks 100,000 400,000 1,000,000 (600,000) 3,500,000 2,200,000 850,000 150,000 100,000 What amount should be reported as trade accounts receivable? 253 4,650,000 4,700,000 4,150,000 4,050,000 132 | al ease oblem 4-12 (AICPA Adapted) Company provided the following information relating P ith ; Rvarrent operations: 10 nts receivable, January 1 foetal neat receivable collected sae Cask sales Bano.cne Inventory» January 1 oe Inventory: December 31 Sed purchases 4,400,000 Gross margin on sales aioe What amount should be reported as accounts receivable on December 31? a. 8,200,000 pb. 6,200,000 ¢. 2,000,000 d. 4,200,000 Problem 4-13 (AICPA Adapted) Steven Company provided the following information during the first year of operations: Total merchandise purchases for the current year 7,000,000 Merchandise inventory on December 31 1,400,060 Collections from customers 4,000,000 All merchandise was marked to sell at 40% above cost. All sales are on a credit basis and all accounts are collectible. What amount should be reported as accounts receivable on December 31? 1,000,000 3,840,000 5,000,000 5,800,000 Be SP 133 Problem 4-14 (IAA) Aroma Company used th cash discounts. In one 0 2021, the entity sold me P5,000,000 to a customer w 20%, 10% and 5%. Credit ter! ed FOB destination, freight colj, Total freight charge paid by the customer was P100,000, on December 27, 2021, the customer returned damaged Body originally billed at P500,000. nt should be reported as net realizable value of ivable on December 31, 2021? e net price method of account, f its transactions on Decembe® for ychandise with a list pri ho was given a trade discount, t ms were 4/10, n/30. 8 of The goods were shipP' What amou the accounts rece a. 3,420,000 b. 2,920,000 c. 2,703,200 d. 2,803,200 Problem 4-15 (AICPA Adapted) On June 1, 2021, Pitt Company sold merchandise with a list price of P5,000,000 to Burr on account. Pitt allowed trade discounts of 30% and 20%. On June 11, 2021, the customer paid in full. : Credit terms were 2/10, n/30 and the sale was made FOB shipping point. Pitt prepaid P200,000 of delivery costs for Burr as an accommodation.. 1, What amount should be reported as sales revenue? a. 5,000,000 b. 2,800,000 c. 3,500,000 d, 2,500,000 2. What amount was received by Pitt from Burt at - remittance in full? a, 2,744,000 b, 2,940,000 ce, 2,944,000 d, 3,140,000 184 Problem 4-14 (IAA) Aroma Company used the net price method of accounting fox cash discounts. In-one of its transactions on December 26 2021, the entity sold merchandise with a list price of P5,000,000 to a customer who was given a trade discount, of 20%, 10% and 5%. Credit terms were 4/10, n/30. The goods were shipped FOB destination, freight Collect, Total freight charge paid by the customer was P100,000, On December 27, 2021, the customer returned damaged goods originally billed at P500,000, What amount should be reported as net realizable value of the accounts receivable on December 31, 2021? 3,420,000 2,920,000 2,703,200 . 2,803,200 Boop Problem 4-15 (AICPA Adapted) On June 1, 2021, Pitt Company sold merchandise with a list price of P5,000,000 to Burr on account. Pitt allowed trade discounts of 30% and 20%. On June 11, 2021, the customer paid in full. 4 Credit terms were 2/10, n/30 and the sale was made FOB shipping point. Pitt prepaid P200,000 of delivery costs for Burr as an accommodation. 1. What amount should be reported as sales revenue? a. 5,000,000 b. 2,800,000 ¢. 3,500,000 d. 2,500,000 2. What amount was rece: «remittance in full? a. 2,744,000 b. 2,940,000 ©. 2,944,000 d, 3,140,000 ived by Pitt from Burr as 134 Problem 4-17 (IAA) Von Company provided the following data for the r F ‘ CUrre, year in relation to accounts receivable: ‘Nt Debits January Lbalance after deducting credit balance P30,000 539,045 Charge sales 5,250,099 Charge for goods out on consignment 50,009 Shareholders’ subscriptions 1,000,099 Accounts written off but recovered 10,009 Cash paid to customer for January 1 credit balance 25,009 Goods shipped to cover January 1 credit balance 5,009 Deposit on long-term contract. 500, Claim against common carrier 400,000 Advances to supplier 300,000 Credits Collections from customers, including overpayment of P50,000 5,200,000 Writeoff 35,000 Merchandise returns 25,000 Allowances to customers for shipping damages 15,000 Collection on carrier claim 50,000" Collection on subscription 200,000 1. What amount should be reported as accounts receivable on December 31? a. 565,000 b. 595,000 c. 545,000 d. 495,000 2. What total amount of trade and other receivables should be reported under current assets? a. 1,745,000 b. 2,045,000 c. 1,245,000 d. 1,195,000 3. What total amount of other receivables should be reported under noncurrent assets? a. 1,650,000 b. 1,150,000 ec. 1,300,000 d. 1,600,000 136 problem 4-18 (IAA) Company provided wonder the followi } es-cash and credit year: a received from credit customers, al of whom hte took advantage of the discount feature of th credit terms 4/10,n/30 ° Cash received: from cash customers 4 Pee Accounts receivable written off as worthless } saa Credit memorandum issued to credit customers f for sales returns and allowances 250,000 cash refunds given to cash customers for sales : returns and allowances 20,000 Recoveries on accounts receivable written off as ; uncollectible in prior periods not included in cash received from credit customers 80,000 Balances on January 1 Accounts receivable 950,000 Allowance for doubtful accounts 100,000 The entity provided for uncollectible accounts by crediting allowance for doubtful accounts in the amount of P70,000 for the current year. 1. What amount should be reported as accounts receivable on December 31? 1,300,000 1,426,000 1,280,000 1,220,000 2. What amount should be reported as allowance for doubtful accounts on December 31? a. 120,000 b. 200,000 ©. 250,000 4. 170,000 eeoP 187

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