1. What is the required allowance for doubtful accounts at year-end?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
![Problem 5-6 (PHILCPA Adapted)
At the beginning of eurrent year. Rampant Company
reported that the allowanee for doubtful accounts has a credit
balance of P170,000.
Bad debt recoveries and bad debta written off in the current
year were P30,000 and P235,000, respectively.
The allowance account had been previously calculated as a
percentage of net aales
It was decided however to provide for doubtful accounts
commencing with the year-end adjusting entry on the basis of
an analysis of the age of the receivables.
The following schedule was prepared.
Percent
uncollectible
Not yet due
1-30 days past due
31-60 days past due
61-90 days paut due
Over 90 days past due
Additional accounta to be written off
1.700,000
1,200,000
100,000
150,000
120,000
30,000
NIL
25
60
100
Required:
1. What is the required allowance for doubtful accounts at
year-end?
2. How much would be the doubtful accounts expense for
the current year?
3. What is the adjusting entry for the doubtful account
expense for the current year?
4. What is the net realizable value of accounts receival
at year-end?
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