1. Ground's estimated bad debts expense for 2016 based on net credit sales is:A. 12,000B. 44,300C. 45,000D. 56,250 2. What is the net realizable value of Ground's accounts receivable on December 31,2016?A. 1,377,700B. 1,397,700C. 1,435,000D. 1,435,700 Ground Corporation applies the allowance method to value its accounts receivable. The company estimates itsbad debts based on past experience, which indicates that 1.875% of net credit sales will be uncollectible. Itstotal sales for the year ended December 31, 2016 amounted to P1,000,000, including cash sales of P400,000.After a thorough evaluation of the accounts receivable from Fire Company amounting to P20,000, Ground hasdecided to write-off this account before year-end adjustments are made. Shown below are Ground's accountbalances on December 31, 2016, before any adjustments and the P20,000 write-off:4,000,0001,500,000250,00033,000SalesAccounts receivableSales discountsAllowance for bad debtsSales returns and allowances350,000Bad debts expenseGround has decided to value its accounts reccivable using the statement of financial position approach assuggested by its external auditors. Presented below is the aging of the accounts receivable subsidiary ledgeraccounts on December 31, 2016:Balance100,000256,000654,00050,000420,0001,480,00060 davs 61-90 days 91-120 days > 120 days100,000180,000500,000AccountAnt Co.Bird Corp.76,000154,000Cat Inc.Dog Corp.Elephant Co.50,000420,000420,00085%Total780,00099%230,00095%50,00060%% collectible

Credit sale=4000000-400000 =3600000

1. Ground's estimated bad debts expense for 2016 based on net credit sales is: A. 12,000 B. 44,300 C. 45,000 D. 56,250 2. What is the net realizable value of Ground's accounts receivable on December 31,2016? A. 1,377,700 B. 1,397,700 C. 1,435,000 D. 1,435,700

1. Ground's estimated bad debts expense for 2016 based on net credit sales is: A. 12,000 B. 44,300 C. 45,000 D. 56,250 2. What is the net realizable value of Ground's accounts receivable on December 31,2016? A. 1,377,700 B. 1,397,700 C. 1,435,000 D. 1,435,700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. Ground's estimated bad debts expense for 2016 based on net credit sales is:

A. 12,000

B. 44,300

C. 45,000

D. 56,250

2. What is the net realizable value of Ground's accounts receivable on December 31,2016?

A. 1,377,700

B. 1,397,700

C. 1,435,000

D. 1,435,700

Ground Corporation applies the allowance method to value its accounts receivable. The company estimates its
bad debts based on past experience, which indicates that 1.875% of net credit sales will be uncollectible. Its
total sales for the year ended December 31, 2016 amounted to P1,000,000, including cash sales of P400,000.
After a thorough evaluation of the accounts receivable from Fire Company amounting to P20,000, Ground has
decided to write-off this account before year-end adjustments are made. Shown below are Ground's account
balances on December 31, 2016, before any adjustments and the P20,000 write-off:
4,000,000
1,500,000
250,000
33,000
Sales
Accounts receivable
Sales discounts
Allowance for bad debts
Sales returns and allowances
350,000
Bad debts expense
Ground has decided to value its accounts reccivable using the statement of financial position approach as
suggested by its external auditors. Presented below is the aging of the accounts receivable subsidiary ledger
accounts on December 31, 2016:
Balance
100,000
256,000
654,000
50,000
420,000
1,480,000
60 davs 61-90 days 91-120 days > 120 days
100,000
180,000
500,000
Account
Ant Co.
Bird Corp.
76,000
154,000
Cat Inc.
Dog Corp.
Elephant Co.
50,000
420,000
420,000
85%
Total
780,000
99%
230,000
95%
50,000
60%
% collectible

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

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