35.The following were taken from the income statement of ABC corporation for the year 2007: Gross profit on sales P800,000 Less: Deductible expenses Provision for bad debts P440,000 80,000 520,000 Net income before income tax P280,000 Additional information: a. Accounts written-off during the year and charged to allowance for bad debts- P50,000. b. Recoveries on accounts receivable previously written-off in 2006 and credited to allowance for bad debts. Allowed as deduction by the BIR P 30,000 20,000 Disallowed by the BIR as deduction d. P340.000 The net income before income tax of ABC Corporation is: c. P330,000 b. P260,000 a. P280,000

35.The following were taken from the income statement of ABC corporation for the year 2007: Gross profit on sales P800,000 Less: Deductible expenses Provision for bad debts P440,000 80,000 520,000 Net income before income tax P280,000 Additional information: a. Accounts written-off during the year and charged to allowance for bad debts- P50,000. b. Recoveries on accounts receivable previously written-off in 2006 and credited to allowance for bad debts. Allowed as deduction by the BIR P 30,000 20,000 Disallowed by the BIR as deduction d. P340.000 The net income before income tax of ABC Corporation is: c. P330,000 b. P260,000 a. P280,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 20. Case Co.’s balances in Allowance for Doubtful Accounts were $25,000 at the beginning of the…

A: Bad debt expenses refer to the amount that is not expected to be received from the customer from the…

Q: PA4. Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable.…

A: Solution: Introduction: Adjusting Entries are the journal entries that are made at the end of a…

Q: Smith Company prepared an aging schedule of its A/R at year-end and determined that the net…

A: The allowance for doubtful accounts has normal credit balance. The net account receivables are…

Q: ABC Company has an accounts receivable balance of $50,000 at the beginning of the year and $70,000…

A: Accounts Receivable refers to the amount of money that a business is entitled to receive from its…

Q: Buffalo Corporation had the following 2020 income statement. Revenues $104,000 Expenses…

A: Cash flows from operating activities: It is a section of Statement of cash flow that explains the…

Q: Current Year PriorYear Accounts receivable, net of allowances of $411 and $380 $ 29,224 $ 26,381…

A: The objective of the question is to calculate the amount of bad debts written off during the current…

Q: A company uses the percent of sales method to estimate bad debts expense. A company expects for 5%…

A: Lets understand the basics. In percentage of sales method, estimation is made for the bad debt in…

Q: After analyzing its accounts receivable at year-end, a company arrives at the following age…

A: XdddAllowance for doubtful accounts is a contra asset account and is to be deducted from the…

Q: Need Correct Answer

A: 1. Preparation of journal entry to record bad debts of the company.Step: 1 Calculation of closing…

Q: Barga Company's net sales for Year 1 and Year 2 are $661,000 and $745,000, respectively. Its…

A: Days Sales Uncollected: It is possible to anticipate the number of days that will pass until…

Q: e year-end adjusting entry for 2018 bad debt using the income statement method. Record the year-end…

A: Event Account Debit Credit A Bad Debt Expense $19,813 Allowance for uncollectible account…

Q: At the end of the prior year, Company reported the following information: Accounts Receivable…

A: Step 1: Begin with the Prior Year BalancesAccounts Receivable (Gross): $125,000Allowance for…

Q: Libby Company uses the percentage of credit sales method for calculating Bad Debt Expense. The…

A: BAD DEBT EXPENSES Bad Debt Expenses is an Amount which is Uncollectible From the Customer on Credit…

Q: Doer Company reports year-end credit sales in the amount of $390,000 and accounts receivable of…

A: Sales are made on cash basis and credit basis. the amount to be collected from Sales made on credit…

Q: Hansaben

A: Step 1: It is given that the company estimates bad debt expense assuming 1% of credit sales.…

Q: Your answer is partially correct. Buffalo Corporation had the following 2020 income statement.…

A: The question is related to Cash Flow Statement. The Cash Flow Statement is summary of Cash Receipts…

Q: Alderwood Company has provided the following information prior to any year-end bad debt adjustment:…

A: Bad debt expense is the amount of credit sales that are no longer collectible from customer during…

Q: Suppose Hearts, Inc., reported net receivables of $2,856 million and $2,628 million at January 31,…

A: The allowance for doubtful accounts estimates the percentage of accounts receivable that are…

Q: Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash…

A: ALLOWANCE FOR DOUBTFUL DEBT ACCOUNTAllowance for Doubtful Debt Account is Considered as Contra Asset…

Q: They recorded $134,560 in accounts receivable for the year and $323,660 in credit sales. The…

A: Solution:- Introduction:- As per the Percent of sales method, Bad debts expense can be identified…

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

ated from HQ07 - Regular Income Tax-Deductions from Gross Income View Document
e click "View Document" to reference essential context about the question.
H
35. The following were taken from the income statement of ABC corporation for the year
2007:
Gross profit on sales
P800,000
Less: Deductible expenses
P440,000
Provision for bad debts
80,000
520,000
Net income before income tax
P280,000
Additional information:
a. Accounts written-off during the year and charged to allowance for bad debts-
P50,000.
b. Recoveries on accounts receivable previously written-off in 2006 and credited to
allowance for bad debts.
Allowed as deduction by the BIR
Disallowed by the BIR as deduction
P 30,000
20,000
d. P340.000
The net income before income tax of ABC Corporation is:
b. P260,000
a. P280,000
c. P330,000
bad Attachments
089351-4055212.jpeg
Question Show Comment Report Issue
Skip

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Net Income before Income Tax:

VIEW

Solution:

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of Justin Corporation are 500,000 and 50,000. Net credit sales totaled 4,500,000 during the year while collections amounted to 4,400,000. Bad debt expense for the year is 30,000. Included in the collections was a 10,000 account that was written off in the prior year and was recovered during the current year. What is the net realizable value of the Accounts Receivable as of the end of the year?
The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of ABC Corporation are P500,000 and P50,000. Net credit sales totaled P4,500,000 during the year while collections amounted to P4,400,000. Bad debts expense for the year is P30,000. Included in the collections was a P10,000 account that was written off in the prior year and was recovered during the current year. What is the net realizable value of the Accounts Receivable as of the end of the year? The answer is 520000. Explain how can we arrive at this answer.
6 Mario Company's Accounts Receivable balance atDecember 31 was $300,000 and there was a credit balance of $1,400 in the Alowance for Doubtful Accounts, The year's sales were $1,800,000. Mario estimates credit losses for the year at 1.5% of sales. After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year- end? A) $300,000 B) $271,600 C) $325,400 D) $277,400
The company estimates 1% of sales revenue should be used to estimate for bad debt expense. what is the amount and what accounts
During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000, and $18,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance of Accounts Receivable would be:
The following data concern Tech Corporation for the 2022 financial year. Credit sales during the year $2 400 000 Accounts receivable 30 June 2022 410 000 Allowance for bad debts 30 June 2022 55 000 Bad debt expense for the year 70 000 What amount will Tech Corporation show on its year-end balance sheet for the net realisable value of its accounts receivable? a. 410 000 b. $285 000 c. $340 000 d. $ 355 000
2. D’Costa Company uses the allowance method of handling credit losses. It estimates losses at 2% of credit sales, which were $1,800,000 this year. At December 31 of this year, the Accounts Receivable balance is $270,000, and the Allowance for Doubtful Accounts has a $3,600 credit balance before adjustment. a. Give the adjusting entry to record bad debts expense for this year. b. What net amount of accounts receivable would appear on the December 31 balance sheet this year? c. Assume that D’Costa Company uses aged accounts receivable as a basis of estimating credit losses, instead of a percent of credit sales. If the firm estimates that $22,800 of the accounts will prove uncollectible, what adjusting entry would D’Costa Company make to record the bad debts expense for this year?
The following information has been extracted from the annual reports of Lilydale Ltd and Monbulk Ltd. Lilydale Ltd Monbulk Ltd $2 950 300 17 100 Sales (net credit) revenue for year Allowance for Doubtful Debts, 1/7/18 Allowance for Doubtful Debts, 30/6/19 Accounts receivable (gross) 1/7/18 Accounts receivable (gross) 30/6/19 $2 204 300 27 100 19780 28 100 722 650 368 000 485 800 384 200 (a) Calculate the receivables turnover ratio and average collection period for both companies. Comment on the difference in their collection experiences. (b) Compare the success or otherwise of their cash collection policies, given that the average receivables turnover for the industry in which the companies operated is 7. Credit terms for both companies are 2/10, n/30.
The annual report for Fabeck Finishing Corporation contained the following information: (in millions) Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net 2021 $673 32 $641 Assume that accounts receivable write-offs amounted to $13 during 2021 and $3 during 2020, and that Fabeck Finishing did not record any recoveries. Bad Debt Expense 2020 $735 31 $704 Required: Determine the Bad Debt Expense for 2021 based on the above facts. (Enter your answer in millions.) million
K During the year, Taylor Company had net credit sales of $47,000. At the end of the year, before adjusting entries, the balance in Accounts Receivable was $14,000 (debit) and the balance in Allowance for Bad Debts was $610 (credit). If the company uses an income statement approach to estimate bad debts at 7%, what is the ending balance in the Allowance for Bad Debts account? OA. $3,900 O B. $3,290 OC. $2,680 O D. $1,590 CISTERS
Qw.8.
5.Blige Corporation had sales revenue of $12,000,000 in 2019 and$15,000,000 in 2020. Accounts receivable were $1,800,000 at the end of2019 and $2,000,000 at the end of 2020.Required(a)Calculate the accounts receivable turnover ratio for 2019 and 2020.(b)Has the management of accounts receivable improved or worsenedfrom 2019 to 2020?(c)What are the advantages and disadvantages of selling goods oncredit?(d)How much cash did Blige Corporation collect from its customers in2020?(e)If sales in 2021 were expected to be $22,500,000, what would youexpect accounts receivable to be at the end of 2021?Does a major increase in accounts receivable create