HW On Receivables A

HOMEWORK ON RECEIVABLES
PROBLEM 1
The net realizable value of Rizal Corp.’s accounts receivable at the end of the year was P1,800,000. At
the beginning of the year, the allowance for doubtful accounts had a balance of P120,000. Charges to
bad debts expense for the year were P160,000 and accounts receivable amounting to P80,000 were
written off.
Determine the gross amount of Rizal’s accounts receivable at the end of the year.
PROBLEM 2
An examination of the 2023 financial statements of Jose Co. discloses the following information:
2022 2023
Accounts receivable, end P558,000 P532,560
Allowance for doubtful accounts, end 22,200 21,000
Allowance for sales returns and allowances, end 14,100 11,748
Gross sales returns and allowances (estimated for the year) 14,700 15,600
Estimated bad debts for the year 21,600 22,500
Sales discounts not taken at end of year 0 1,200
Credit sales during the year (terms, 2/10, n/60) 1,125,000 1,140,000
Cash collected on AR during the year (net of discounts taken) 1,056,000 1,102,500
Required: Reconstruct the journal entries that were made by Jose during 2023 to record the changes
in the following accounts. (Assume that sales returns and allowances are estimated in the period of
sales and the net method is used in accounting for sales discounts.)
1. Allowance for doubtful accounts
2. Allowance for sales returns and allowances
3. Accounts receivable
PROBLEM 3
Mabini Co. prepared the following analysis of its accounts receivable (AR) on Dec. 31, 2023:
0-30 days 4,000,000
31-60 days 2,500,000
61-90 days 1,200,000
91-180 days 600,000
Over 180 days 120,000
For five years, Mabini has experienced the uncollectibility of its AR for the last 5 years:
End of year % uncollectible on days overdue
Year
balance 0-30 31-60 61-90 90-180 Over 180
2022 9,700,000 6 9 22 55 84
2021 9,300,000 5 8 18 64 75
2020 8,800,000 2 9 20 62 82
2019 8,200,000 3 12 24 59 80
2018 7,500,000 4 7 16 60 79
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Before any adjustments were made, the balance of the allowance for doubtful accounts was P150,000.
Mabini computes for the balance of the allowance for doubtful accounts at the average percentage of
the losses for the last five years.
Compute for Mabini’s doubtful accounts expense and ending allowance for doubtful accounts balance.
PROBLEM 4
Del Pilar Corp. required additional cash for its operation and used its accounts receivable to raise such
needed cash, as follows:
On December 1, 2023, Del Pilar assigned on a non-notification basis accounts receivable of P4,000,000
to a bank in consideration for a loan of 90% of the receivables less a 0.5% service fee on the accounts
assigned. Del Pilar signed a note for the bank loan. On December 31, 2023, Del Pilar collected assigned
accounts of P2,400,000 less discount of P160,000. Del Pilar remitted the collections to the bank in partial
payment for the loan. The bank applied first the collection to the interest and the balance to the
principal. The agreed interest is 1.25% per month on the loan balance.
Del Pilar sold P1,750,000 of accounts receivable for P1,350,000. The receivables had a carrying amount
of P1,600,000 and were sold outright on a non-recourse basis.
Del Pilar received an advance of P400,000 from Greg Bank by pledging P500,000 of accounts receivable.
Del Pilar issued a 1-year note for this.
On December 31, 2023, Del Pilar discounted at a bank a customer’s P1,200,000, 10-month, 10% note
receivable dated April 30, 2023. The bank discounted the note at 15% on the same date.
1. In its December 31, 2023, statement of financial position, how much should Del Pilar report as note
payable in its current liabilities section?
2. How much is Del Pilar’s equity in the assigned accounts receivable as of December 31, 2023?
3. How much were the proceeds from the note receivable discounted on December 30?
4. How much was debited to the Allowance for Doubtful Accounts during the sale of the receivables?
PROBLEM 5
On March 1, 2024, Luna Co. discounted its P1,000,000, 10%, 9-month note to a financial institution. The
note was dated January 1, 2024, and the institution discounted the note at 12%.
How much did Luna receive on March 1?
PROBLEM 6
Melchora Corp. received a 5-year, 8% note from Aquino Inc. for the sale of its inventory on Jan. 1, 2023.
The items cost Melchora P1,200,000 and were sold for P4,000,000, the face value of the note signed by
Aquino. The note pays interest every June 30 and Dec. 31. The effective interest on this note is 10%.
1. What is the amount of the note at initial recognition?

2. How much is the interest revenue recorded by Melchora in 2024?
3. What is the carrying value of the note at the end of 2025?
4. What is the unamortized discount on the note on Dec. 31, 2026?
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PROBLEM 7
On January 1, 2023, Juan Co. received a P3,000,000, 10% note from a customer upon the sale of its
goods. The note is to be paid in six equal semi-annual installments, plus interest on the outstanding
balance every June 30 and December 31, starting June 30, 2023. The effective rate on the note is 9%.
1. How much is the note upon initial recognition?

2. How much is the interest income recognized by Juan in 2023?
3. How much is the carrying amount of the note on December 31, 2024?
PROBLEM 8
On January 1, 2023, Sultan Co. received a P4,000,000, noninterest-bearing note from a borrower. The
note is to be paid in 16 quarterly installments starting January 1, 2023. The effective rate on this note
is 12%.
1. How much is the note upon initial recognition?

2. How much is the interest income recognized by Sultan in 2023?
3. How much is the carrying amount of the note on December 31, 2024?
August 2023
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HOMEWORK ON RECEIVABLES

How much did Luna receive on March 1?

1. What is the amount of the note at initial recognition?

1. How much is the note upon initial recognition?

1. How much is the note upon initial recognition?

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