X Company 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 memo issued to credit customers for sales returns 250,000
Cash refund given to cash customers for sales returns 20,000
Recoveries on accounts receivable written off in prior periods
Not included in cash received from customers stated above 80,000

Balances on January 1:
Accounts receivable 950,000
Allowance for doubtful accounts 100,000

The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the amount of P70,000 for the c

Q1: What amount should be reported as accounts receivable on December 31?

Q2: What amount should be reported as allowance for doubtful accounts on December 31?
 Beg.
Credit Sales

Accounts Receivable - Beg ₱ 950,000.00

Add: Credit Sales* ₱ 3,800,000.00
Less: Cash received from credit customers** ₱ (3,024,000.00)
Less: Sales Discounts ₱ (126,000.00)
Less: Sales Returns and Allowances ₱ (250,000.00)
Less: Writeoff ₱ (50,000.00)
Accounts Receivable - End ₱ 1,300,000.00

Write off

AFDA - Beg ₱ 100,000.00

Add: Recovery ₱ 80,000.00
Add: Doubtful accounts expense ₱ 70,000.00
Less: Write off ₱ (50,000.00)
AFDA -End ₱ 200,000.00
 Accounts Receivable
₱ 950,000.00 ₱ (3,024,000.00)
₱ 3,800,000.00 ₱ (126,000.00)
₱ (250,000.00)
₱ (50,000.00)

₱ 1,300,000.00

All. For DA
₱ (50,000.00) ₱ 100,000.00
₱ 80,000.00
₱ 70,000.00

₱ 200,000.00
Collection
Sales Dsicounts
Sales Returns and Allowances
Write off

* Total Sales
Less: Cash received from cash customers
Credit Sales

** Gross AR Collected (3,024,000 / 96%)

Less: Sales Discount (4% x 3,150,000)
Cash received from credit customers

Beg
Recovery
Doubtful Accounts Expense
₱ 5,900,000.00
₱ (2,100,000.00)
₱ 3,800,000.00

₱ 3,150,000.00 100%
₱ (126,000.00) 4%
₱ 3,024,000.00 96%
The beginning balance of X Co.’s allowance for bad debt is P56,500 and its trade receivable is P3,220,000, esti
P30,000 receivables that are worthless, how much is X Co

All. For DA
Write off ₱ 30,000.00 ₱ 56,500.00
₱ -
₱134,500.00

₱ 161,000.00

AFDA - Beg ₱ 56,500.00

Add: Recovery ₱ -
Add: Doubtful accounts expense ₱134,500.00
Less: Write off ₱ 30,000.00
AFDA -End ₱ 161,000.00
ble is P3,220,000, estimates 5% of the outstanding balance of its trade receivable is uncollectible. It has
ess, how much is X Co.’s bad debt expense in 2023?

Beg
Recovery
Doubtful Accounts Expense
 X Company’s allowance for doubtful accounts was P1,000,000 at the end of 2023 and P900,000 at the end of 2022. For the year en
income statement. What was the amount of write off in

All. For DA
Write off ₱(60,000.00)

AFDA - Beg ₱ 900,000.00

Add: Recovery ₱ -
Add: Doubtful accounts expense ₱ 160,000.00
Less: Write off ₱ (60,000.00)
AFDA -End ₱ 1,000,000.00
nd P900,000 at the end of 2022. For the year ended December 31, 2023, the entity reported bad debts expense of P160,000 in the
tatement. What was the amount of write off in 2023?

All. For DA
₱ 900,000.00 Beg
₱ - Recovery
₱ 160,000.00 Doubtful Accounts Expense

₱ 1,000,000.00
X Company provided the following data for the current year:

Allowance for doubtful accounts - January 1 180,000

Sales 9,500,000
Sales Returns and Allowances 800,000
Sales Discounts 200,000
Accounts written off as uncollectible 200,000

The entity provided for doubtful accounts expense at the rate of 5% of net sales.

Q1: What amount should be reported as doubtful accounts expense?

Q2: What amount should be reported as allowance for doubtful accounts on December 31?
 Write off

AFDA - Beg ₱ 180,000.00

Add: Recovery ₱ -
Add: Doubtful accounts expense ₱ 425,000.00
Less: Write off ₱ (200,000.00)
AFDA -End ₱ 405,000.00
 All. For DA
₱ (200,000.00) ₱ 180,000.00 Beg
₱ - Recovery
₱ 425,000.00 Doubtful Accounts Expense

₱ 405,000.00

NET SALES:
Sales
Less: Sales Returns and Allowances
Less: Sales Discounts
Net Sales
₱ 9,500,000.00
₱ (800,000.00)
₱ (200,000.00)
₱ 8,500,000.00
X Co. provided the following information pertaining to accounts receivable at year-end:

Days Outstanding Amount Collectible

0-60 1,200,000 95%
61-120 900,000 90%
Over 120 1,000,000 80%

During the current year, the entity wrote off P100,000 in accounts receivable and recovered P50,000 that had been written off in pr
the current year, the allowance of doubtful accounts was P150,000.

Q1: Under the aging method, what amount of allowance for doubtful accounts should be reported at year-end? P350,000
Q2: Which amount should be recognized as doubtful accounts expense for the year? P250,000
Days Oustanding Amount
0-60 ₱ 1,200,000.00
61-120 ₱ 900,000.00
over 120 ₱ 1,000,000.00
AFDA END

Write off

AFDA - Beg ₱ 150,000.00

Add: Recovery ₱ 50,000.00
Add: Doubtful accounts expense ₱ 250,000.00
Less: Write off ₱ 100,000.00
AFDA -End ₱ 350,000.00
Percentage uncollectible Amount uncollectible
5% ₱ 60,000.00
10% ₱ 90,000.00
20% ₱ 200,000.00
₱ 350,000.00

All. For DA
₱ 100,000.00 ₱ 150,000.00 Beg
₱ 50,000.00 Recovery
₱ 250,000.00 Doubtful Accounts Expense

₱ 350,000.00
Expense
 On December 1, 2023, X Company assigned P1,000,000 of accounts receivable to Y Company as a security for a one-year loan of P
P245,000 on assigned accounts after deducting P5,000 of discounts. X Company accepted returns worth P10,000 and wrote-off assig
fin

Accounts Receivable - Assigned ₱ 1,000,000.00

Collection on Assigned Receivable ₱ (245,000.00)
Discounts ₱ (5,000.00)
Returns ₱ (10,000.00)
Write-offs ₱ (9,000.00)
AR - End ₱ 731,000.00
urity for a one-year loan of P600,000. Y Company charges a 2% commission on the amount of the loan; the interest rate on the note was 10%. Du
h P10,000 and wrote-off assigned accounts totaling P9,000. What amount of accounts receivables should X Company continue to record in its Dec
financial position?

Accounts Receivable
Beg. ₱ 1,000,000.00 ₱ (245,000.00) Collection
₱ (5,000.00) Sales Dsicounts
₱ (10,000.00) Sales Returns and Allowances
₱ (9,000.00) Write off

AR END ₱ 731,000.00
e interest rate on the note was 10%. During December, X collected
X Company continue to record in its December 31, 2023 statement of

es Dsicounts
es Returns and Allowances
 On December 1, 2023, X Company factored receivables with a face amount of P600,000 (with existing provision for uncollectible a
incurred and paid P6,000 service cost related to the factoring. What amount of loss from

Carrying amount of AR (600K - 12K) ₱ 588,000.00

Advances ₱ (490,000.00)
Factor's Holdback ₱ (30,000.00)
Service Costs ₱ (6,000.00)
Loss on Factoring ₱ 62,000.00

Carrying Amount of AR ₱ 588,000.00

FHB ₱ (30,000.00)
Service cost ₱ (6,000.00)
Net Proceeds ₱ 552,000.00
Less: Cash Advanced ₱ (490,000.00)
Loss on Factoring ₱ 62,000.00
provision for uncollectible accounts in the amount of P12,000) to Y Company. Y Company advances P490,000 to X and retains 5% of the receivab
g. What amount of loss from the transfer should X recognize assuming the factoring agreement is considered as a sale?
X and retains 5% of the receivables. X Company
sale?
On September 30, 2023, X Company discounted at the bank a customer’s P600,000, 6-month, 10% note receivable dated May 31, 20
transfer assuming the discounting is

Maturity Value:
Principal ₱ 600,000.00
Interest for the full term ₱ 30,000.00
Maturity Value ₱ 630,000.00

Discount:
Maturity Value ₱ 630,000.00
Multiply by: DR 12%
Multiply by: DP 1/6
Discount ₱ 12,600.00

Net Proceeds:
Maturity Value ₱ 630,000.00
Less: Discount ₱ 12,600.00
Net Proceeds ₱ 617,400.00

Accrued income:
Principal ₱ 600,000.00
Multiply by: IR 10%
Multiply by: Expired Term 1/3
Accrued interest ₱ 20,000.00

Journal Entry
Cash ₱ 617,400.00
Loss on discounting ₱ 2,600.00
Loan Receivable
Interest Income

or:
Carrying Amount (600k + (600k x 10% x 4/12) ₱ 620,000.00
Less: Net Proceeds ₱ (617,400.00)
Loss/ (Gain) on discounting ₱ 2,600.00

cash ₱ 617,400.00
less: LR ₱ (600,000.00)
less: accrued interest ₱ (20,000.00)
Loss ₱ (2,600.00)
6-month, 10% note receivable dated May 31, 2023. The bank discounted the note at 12%. What amount of gain or loss should Isaiah Company rec
transfer assuming the discounting is treated as a sale?

₱ 600,000.00
₱ 20,000.00
or loss should Isaiah Company recognize from the
JOSH / LIA Practice problem solman:

Problem 1:
A. Percentage of Sales
Sales ₱ 18,750,000.00
Multiply by: Percentage of sales on account 80%
Net credit sales ₱ 15,000,000.00
Multiply by: Percentage of bad debts 1%
Bad Debts Expense ₱ 150,000.00

Allowance for Doubtful Accounts, Beg. ₱ 10,000.00

Bad Debts Expense ₱ 150,000.00
AFDA, End ₱ 160,000.00

AR, End ₱ 1,000,000.00

Less: AFDA ₱ (160,000.00)
NRV ₱ 840,000.00

B. Percentage of Receivables
AR ₱ 1,000,000.00
Multiply by: Percentage of Bad Debts 10%
AFDA, End ₱ 100,000.00

Allowance for Doubtful Accounts, Beg. ₱ 10,000.00

Bad Debts Expense ₱ 90,000.00
AFDA, End ₱ 100,000.00

AR, End ₱ 1,000,000.00

Less: AFDA ₱ (100,000.00)
NRV ₱ 900,000.00

C. Aging of Receivables
Under 30 ₱ 550,000.00
31-180 ₱ 300,000.00
181-360 ₱ 100,000.00
TOTAL ₱ 950,000.00

AFDA, Beg ₱ 10,000.00

Less: Wrtie off (1M - 950K) ₱ (50,000.00)
Add: BDE ₱ 142,500.00
AFDA, End ₱ 102,500.00

AR, End ₱ 1,000,000.00

Less: Write off ₱ (50,000.00)
Less: AFDA ₱ (102,500.00)
NRV ₱ 847,500.00

PROBLEM 2:
Trade receivables aged 0-15 days ₱ 300,000.00
Multiply by: Percentage of the discount 2%
Total Discount ₱ 6,000.00
Multiply by: Percentage of customers taking discount 50%
Provision for Sales Discount ₱ 3,000.00

0-15 ₱ 300,000.00
16-30 ₱ 180,000.00
31-60 ₱ 15,000.00
Over 60
AFDA, End

AR, End ₱ 502,500.00

Less: Sales Discount ₱ (3,000.00)
Less: AFDA ₱ (16,500.00)
NRV ₱ 483,000.00
 JE:
BDE ₱ 150,000.00
AFDA ₱ 150,000.00

% Uncollectible
5% ₱ 27,500.00
15% ₱ 45,000.00
30% ₱ 30,000.00
₱ 102,500.00
% Uncollectible
0% ₱ -
5% ₱ 9,000.00
10% ₱ 1,500.00
₱ 6,000.00
₱ 16,500.00