Analysis of accounts receivable reveals that with two exceptions, all appeared collectible as at December 31, 2021. These are: a.) The Bravo Company had fallen into receivership and were expected to realize only seventy centavos on a peso. The December 31, 2021 receivable balance was P227,000. On January 29, 2022, you verified that P200,000 was already collected from Bravo Company. Required: adjusting entries
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.
Analysis of
a.) The Bravo Company had fallen into receivership and were expected to realize only seventy centavos on a peso. The December 31, 2021 receivable balance was P227,000. On January 29, 2022, you verified that P200,000 was already collected from Bravo Company.
Required:
![You have been engaged to audit FAR EASTERN COMPANY, a new client, for the year ended,
December 31, 2021. The company prepared the trial balance set forth below, as of December 31,2021,the
close of its second year of operations.
Account Titles
Unadjusted Trial Balance
Debit
Credit
Cash
112,600.00
Marketable Securities
72,000.00
Allowance for decline in value of securities
Accounts Receivable - Trade
1,758,220.00
Allowance for doubtful accounts
40,000.00
Accounts Receivable - Others
Advances to affiliate
48,000.00
250,000.00
Inventory, December 31, 2021
Property, Plant and Equipment
Accumulated Depreciation
2,770,000.00
Accounts Payable
Income Tax Payable
Long-term Debt
Ordinary Share Capital
Retained Earnings
Revaluation Increment
Sales
Cost of Sales
2,269,604.00
170,622.00
Operating Expenses
Other Charges
100,000.00
Provision for Income Taxes (35%)
80,954.00
Discontinued Operations (Net)
6,500.00
Cumulative Effect of Change in Accounting Principle (Net)
13,000.00
7,691,500.00
20,000.00
68,100.00
1,240,000.00
408,616.00
71,260.00
60,000.00
2,042,000.00
770,000.00
240,000.00
2,771,524.00
7,691,500.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1dd2a25c-0ba6-469a-9db5-f2ee2d9ca18d%2F74271967-2c5c-4b3c-8154-ab5e8c3c87c6%2Fab3jiwq_processed.png&w=3840&q=75)
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