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7240 - Accounts Receivable

The document contains a series of accounting problems related to accounts receivable, including calculations for amortized costs, doubtful accounts, and net realizable values. It presents multiple-choice questions based on provided financial data and scenarios, requiring the reader to analyze and determine the accuracy of various statements. The focus is on understanding the treatment of accounts receivable and the impact of sales, collections, and write-offs on financial reporting.

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34 views2 pages

7240 - Accounts Receivable

The document contains a series of accounting problems related to accounts receivable, including calculations for amortized costs, doubtful accounts, and net realizable values. It presents multiple-choice questions based on provided financial data and scenarios, requiring the reader to analyze and determine the accuracy of various statements. The focus is on understanding the treatment of accounts receivable and the impact of sales, collections, and write-offs on financial reporting.

Uploaded by

nuggs
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS


MAY 2024 CPALE BATCH 95

ACCOUNTS RECEIVABLE
1. An entity provided the following information for the current year:
Accounts receivable – January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding recovery of accounts written off 7,500,000
Accounts written off as worthless 100,000
Sales returns 400,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 300,000
Estimated uncollectible accounts on December 31 per aging 600,000
What is the “amortized cost” of accounts receivable on December 31?
a. 4,000,000
b. 3,700,000
c. 3,450,000
d. 3,100,000

2. An entity provided the following data for the current year:


Allowance for doubtful accounts January 1 600,000
Sales 9,500,000
Sales returns and allowances 800,000
Sales discount 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful accounts expense at the rate of 10% of net sales.
I. The doubtful accounts expense should be reported at P850,000
II. The allowance for doubtful accounts should be reported at P1,250,000
III. The estimate of uncollectible accounts based on percentage of sales emphasizes bad debt expense
a. All statements are true
b. Only statements I and II are true
c. Statement I is not true
d. All statements are not true

3. An entity provided the following information pertaining to accounts receivable at year-end:


Days outstanding Amount Uncollectible
0 - 60 1,200,000 5%
61 - 120 900,000 10%
Over 120 1,000,000 20%
During the current year, the entity wrote off P100,000 in accounts receivable and recovered P50,000 that
had been written off in prior years. At the beginning of current year, the allowance for doubtful accounts
was P150,000.
I. The allowance for doubtful accounts should be reported at P350,000.
II. The doubtful accounts expense should be reported at P250,000
III. When an aging of accounts receivable is prepared, the resulting amount is the desired credit
balance of the allowance for doubtful accounts at the end of year
a. All statements are true
b. Only two statements are true
c. Only one statement is not true
d. All statements are not true

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4. At the beginning of current year, an entity reported accounts receivable of P2,000,000 and allowance for
doubtful accounts of P100,000.
Credit sales during the year amounted to 7,200,000, Ninety percent of the credit customers did not take
advantage of the 5/10, N/30 terms. The customers who did not take advantage of the cash discount paid
P5,940,000. Sales returns from credit customers amounted to P80,000.
During the year, accounts totaling P60,000 were written off as uncollectible. Recoveries amounted to
P10,000 during the year. This amount was not included in the total collections from credit customers.
The allowance for doubtful accounts is adjusted so that it represented a percentage of the year-end
outstanding accounts receivable.
I. The year-end accounts receivable should be reported at P2,400,000 before allowance.
II. The doubtful accounts expense should be reported at P70,000 for the current year.
III. The net realizable value of accounts receivable should be reported at P2,280,000
IV. Under the allowance method, the collection of an account previously written of would not affect
the allowance account.
a. All statements are true
b. All statements are not true
c. Only statements I, Il and III are true
d. Only statements I and II are true.

5. An entity provided the following transactions affecting accounts receivable during the current year:
Sales – cash and credit 5,900,000
Cash received from credit customers, all of whom took advantage of the discount
feature of the credit terms 4/10, n/30 3,024,000
Cash received from cash customers 2,100,000
Accounts receivable written off as worthless 50,000
Credit memorandum issued to credit customers for sales return 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 customers stated above 80,000
At the beginning of current year, the balances are accounts receivable P950,000 and the allowance for
doubtful accounts P100,000. At year-end, an aging of accounts receivable indicated that P250,000 would
be uncollectible.
I. The accounts receivable before allowance should be reported at end of year at P1,300,000.
II. The doubtful accounts expense should be register at P250,000.
III. The net realizable value of accounts receivable should be reported at P1,050,000.
IV. Under aging of accounts receivable, the doubtful accounts expense is measured indirectly and the
allowance for doubtful accounts is measured directly.
a. All statements are true
b. Only statements I and IV are true
c. Only statements I, III and IV are true
d. All statements are not true.

End

7240

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