21. Ebasan Company estimates its doubtful accounts by aging its accounts receivable. The aging schedule ofaccounts receivable at December 31, 2020 is presented below:Age of Accounts0-30 days31-60 daysAmountP1,264,800691,50061-90 days288,600114,97591-120 daysOver 120 days59,100Ebasan's uncollectible accounts experience for the past 5 years are summarized in the following schedule:Year0-3031-60 61-90 91-120 Over 1202019Receivable(Dec 31)P1,968,7501,500,000697,5000.3% 1.8% 12%38%65%20180.5%1.6%41%70%20171.5%0%50%69%0.2%0.4%20161,224,0001,7% 10.2%47%81%20151,865,5000.9% 2.0% 9.7% 33%95%The balance of the allowance for doubtful accounts at December 31, 2020 before adjustment is P126,751. Thenecessary adjusting journal entry to adjust the allowance for doubtful accounts as of Dec 31,2020 wouldinclude:A. A debit to retained earnings of P13,894,B. A debit to doubtful accounts expense P140,644.C.A credit to doubtful accounts expense P140,644.D. A credit to allowance for doubtful accounts of P13,894.

Allowance for doubtful debts: It is a contra-asset account that is related with accounts receivable…

21. Ebasan Company estimates its doubtful accounts by aging its accounts receivable. The aging schedule of accounts receivable at December 31, 2020 is presented below: Age of Accounts Amount P1,264,800 0-30 days 31-60 days 691,500 61-90 days 288,600 114,975 91-120 days Over 120 days 59,100 Ebasan's uncollectible accounts experience for the past 5 years are summarized in the following schedule: Year 0-30 31-60 61-90 91-120 Over 120 2019 1.8% 12% 38% 65% Receivable (Dec 31) P1,968,750 1,500,000 697,500 1,224,000 2018 41% 70% 2017 0.3% 0.5% 1.6% 0.2% 1.5% 9% 0.4% 1.7% 10.2% 1 0.9% 2.0% 9.7% 50% 69% 2016 47% 81% 2015 1,865,500 33% 95% The balance of the allowance for doubtful accounts at December 31, 2020 before adjustment is P126,751. The necessary adjusting journal entry to adjust the allowance for doubtful accounts as of Dec 31,2020 would include: A. A debit to retained earnings of P13,894. B. A debit to doubtful accounts expense P140,644. C. A credit to doubtful accounts expense P140,644. D A credit to allowance for doubtful accounts of P13.894.

21. Ebasan Company estimates its doubtful accounts by aging its accounts receivable. The aging schedule of accounts receivable at December 31, 2020 is presented below: Age of Accounts Amount P1,264,800 0-30 days 31-60 days 691,500 61-90 days 288,600 114,975 91-120 days Over 120 days 59,100 Ebasan's uncollectible accounts experience for the past 5 years are summarized in the following schedule: Year 0-30 31-60 61-90 91-120 Over 120 2019 1.8% 12% 38% 65% Receivable (Dec 31) P1,968,750 1,500,000 697,500 1,224,000 2018 41% 70% 2017 0.3% 0.5% 1.6% 0.2% 1.5% 9% 0.4% 1.7% 10.2% 1 0.9% 2.0% 9.7% 50% 69% 2016 47% 81% 2015 1,865,500 33% 95% The balance of the allowance for doubtful accounts at December 31, 2020 before adjustment is P126,751. The necessary adjusting journal entry to adjust the allowance for doubtful accounts as of Dec 31,2020 would include: A. A debit to retained earnings of P13,894. B. A debit to doubtful accounts expense P140,644. C. A credit to doubtful accounts expense P140,644. D A credit to allowance for doubtful accounts of P13.894.

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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Concept explainers

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.

Question

100%

21. Ebasan Company estimates its doubtful accounts by aging its accounts receivable. The aging schedule of
accounts receivable at December 31, 2020 is presented below:
Age of Accounts
0-30 days
31-60 days
Amount
P1,264,800
691,500
61-90 days
288,600
114,975
91-120 days
Over 120 days
59,100
Ebasan's uncollectible accounts experience for the past 5 years are summarized in the following schedule:
Year
0-30
31-60 61-90 91-120 Over 120
2019
Receivable
(Dec 31)
P1,968,750
1,500,000
697,500
0.3% 1.8% 12%
38%
65%
2018
0.5%
1.6%
41%
70%
2017
1.5%
0%
50%
69%
0.2%
0.4%
2016
1,224,000
1,7% 10.2%
47%
81%
2015
1,865,500
0.9% 2.0% 9.7% 33%
95%
The balance of the allowance for doubtful accounts at December 31, 2020 before adjustment is P126,751. The
necessary adjusting journal entry to adjust the allowance for doubtful accounts as of Dec 31,2020 would
include:
A. A debit to retained earnings of P13,894,
B. A debit to doubtful accounts expense P140,644.
C.
A credit to doubtful accounts expense P140,644.
D. A credit to allowance for doubtful accounts of P13,894.

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