Your audit of Hemsworth Company’s accounts receivable and its related allowance for doubtful accounts expense revealed the following information: a) The general ledger of Hemsworth Company have the following balances: Accounts receivable P360,000 Allowance for doubtful accounts (1,320) Amortized cost P358,680 b) An aging of Hemsworth Company’s accounts receivable per subsidiary ledgers on December 31, 2021 contained the following: Time Outstanding                Amount of Accounts Receivable Under 30 days                                 P240,000 30 – 60 days                                        48,000 61 – 120 days                                      36,000 121 – 180 days                                    24,000 Over 180 days                                     12,000                                                         P360,000 c) Investigations revealed that 50% of the over 180 days account is definitely uncollectible and that a P12,000 customer credit balance for an advance payment for a future delivery was included in the under 30 days account. d) Based on past experiences, the company believes that the following uncollectible percentages are appropriate: Under 30 days – 30 – 60 days 3% 61 – 120 days 15% 121 – 180 days 30% Over 180 days 60% e) The term of sales is 10/15, n/30. As per experience, 20% of the customer whose accounts are still current are expected to take advantage of the cash discount. f) Also, based on past experience, you have ascertained that 5% of the current account should be provided for probable future sales returns. Required: 1) What is the adjusted balance of the accounts receivable account? 2) What is the correct doubtful accounts expense for the period? 3) What is the allowance for doubtful accounts for the period? 4) What is the carrying value of the company’s accounts receivable as of December 31, 2021? 5) Assuming that the allowance for doubtful accounts had a P1,680 debit balance before any adjustments, what is the correct doubtful accounts expense?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Your audit of Hemsworth Company’s accounts receivable and its related allowance for doubtful accounts expense revealed
the following information:

a) The general ledger of Hemsworth Company have the following balances:
Accounts receivable P360,000
Allowance for doubtful accounts (1,320)
Amortized cost P358,680

b) An aging of Hemsworth Company’s accounts receivable per subsidiary ledgers on December 31, 2021 contained the
following:
Time Outstanding                Amount of Accounts Receivable
Under 30 days                                 P240,000
30 – 60 days                                        48,000
61 – 120 days                                      36,000
121 – 180 days                                    24,000
Over 180 days                                     12,000
                                                        P360,000

c) Investigations revealed that 50% of the over 180 days account is definitely uncollectible and that a P12,000 customer
credit balance for an advance payment for a future delivery was included in the under 30 days account.
d) Based on past experiences, the company believes that the following uncollectible percentages are appropriate:
Under 30 days –
30 – 60 days 3%
61 – 120 days 15%
121 – 180 days 30%
Over 180 days 60%
e) The term of sales is 10/15, n/30. As per experience, 20% of the customer whose accounts are still current are expected
to take advantage of the cash discount.
f) Also, based on past experience, you have ascertained that 5% of the current account should be provided for probable
future sales returns.

Required:
1) What is the adjusted balance of the accounts receivable account?
2) What is the correct doubtful accounts expense for the period?
3) What is the allowance for doubtful accounts for the period?
4) What is the carrying value of the company’s accounts receivable as of December 31, 2021?
5) Assuming that the allowance for doubtful accounts had a P1,680 debit balance before any adjustments, what is the correct doubtful accounts expense? 

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