DOMALAON, Lorie Jae E.

HW # 2
ACT 123 April 26, 2017
EASY

1. Heinz Company prepared an aging of accounts receivable on

December 31, 2016 and determined that the net realizable value of the
accounts receivable was P 2,500,000.

Allowance for doubtful accounts on January 1 280,000

Accounts written off as uncollectible
230,000
Accounts receivable on December 31 2,700,000
Uncollectible accounts recovery 50,000

What amount should be recognized as doubtful accounts expense for

the current year? P 100,000

SOLUTION:
ADA, beg 280,000
Recovery 50,000
DAE (SQUEEZE) 100,000
Written off (230,000)
ADA, END 200,000

2. Maggi Company reported the following balances after adjustment at

year-end:
2017 2016
Accounts Receivable 5,250,000
4,800,000
Net Realizable Value 5,100,000
4,725,000
During 2017, the entity wrote off accounts totaling P 160,000 and
collected P 40,000 on accounts written off in previous year.
What amount should be recognized as doubtful accounts expense for
the year ended December 31, 2017? P 195,000

SOLUTION:
ADA, beg (4,800,000 4,725,000)
75,000
Recovery of accounts written off in previous year
40,000
Doubtful accounts expense 2016(SQUEEZE)
195,000
Written off (160,000)
ADA, end (5,250,000 5,100,000)
150,000
DOMALAON, Lorie Jae E. HW # 2
ACT 123 April 26, 2017
3. Umaasa Company used the allowance method of accounting for
uncollectible accounts. During the current year, the entity had charged
P 800,000 to bad debt expense, and wrote off accounts receivable of P
900,000 as uncollectible.
What was the decrease in working capital? P 800,000
SOLUTION: only the bad debt expense decreases working capital

MODERATE

4. On December 31, 2011 balance sheet of Pagod Company, the current

receivables consisted of the following:
Trade accounts receivable 232,500
Allowance for uncollectible accounts (5,000)
Claim against shipper for goods lost in transit ( oct. 2012) 7,500
Selling price of unsold goods sent by Pagod to consignee 65,000
Security deposit on lease of warehouse used for
storing inventories 75,000
TOTAL P 375,000

At December 31, 2011, how much should Pagods total current net
receivables? P 235,000

SOLUTION:
Trade accounts receivable 232,500
Allowance for uncollectible accounts (5,000)
Claim receivable 7,500
Total current net receivables P 235,000

HARD

5. Quaker Corporation had the following information relating to its

accounts receivable:

Accounts receivable, beg 1,950,000

Credit sales 8,100,000
Collections from customers 7,125,000
Accounts written off 187,500
Estimated uncollectible receivables per aging
of receivables for 2011 247,500

in the December 31, 2011 statement of financial position, what is the

amortized cost of the receivable? P 2,490,000

SOLUTION:
DOMALAON, Lorie Jae E. HW # 2
ACT 123 April 26, 2017
AR, beg 1,950,000
Credit Sales 8,100,000
Collections P 7,125,000
Written-off 187,500 (7,312,500)
AR, end 2,737,500
Uncollectible accounts (247,500)
Amortized cost ( net cash inflow) P
2,490,000