Based on the review of collectibility of the account balances in "prior to January 1, 202 aging category, additional accounts totaling P100,000 are to be written off on December 2020. Effective with the year ended December 31, 2020, the entity adopted a new accounti method for estimating the allowance for doubtful accounts at the amount indicated by t year-end aging of accounts receivable. Required: a. Determine the allowance for doubtful accounts before adjustment. b. Determine the required allowance for doubtful accounts on December 31, 2020, c Prepare adjusting entry ta record the daubtful accounts expense for 2020.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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From inception af aperations. XYZ Company pravided for uncollectible accounts receivable
under the allowance method using the percentage of sales method.
The balance in the allowance for doubtful accounts was on January 1, 2020.
During the current year, credit sales totaled interim provisians for doubtful accounts were
made at 2% of credit sales, P300,000 af bad debts were written off, and recaveries of
accounts previously written off amounted to PS0,00.
The aging of accounts receivable showed the following summary
Collectible
Classification
November to December
July to October
| January to June
Priar to January 1, 2020
Balance
5.000,000
95%
2.000,000
1.500.000
400.000
90%
75%
25%
Based on the review of collectibility of the account balances in "prior to January 1, 2020
aging category, additional accounts totaling P100,000 are to be written off on December 31,
2020.
Effective with the year ended December 31, 2020, the entity adopted a new accounting
method for estimating the alowance for doubtful accounts at the amount indicated by the
year-end aging of accounts receivable
Required:
a. Determine the allowance for doubtful accounts before adjustment.
b. Determine the required allowance for doubtful accounts on December 31, 2020.
c. Prepare adjusting entry ta record the doubtful accounts expense for 2020.
Transcribed Image Text:From inception af aperations. XYZ Company pravided for uncollectible accounts receivable under the allowance method using the percentage of sales method. The balance in the allowance for doubtful accounts was on January 1, 2020. During the current year, credit sales totaled interim provisians for doubtful accounts were made at 2% of credit sales, P300,000 af bad debts were written off, and recaveries of accounts previously written off amounted to PS0,00. The aging of accounts receivable showed the following summary Collectible Classification November to December July to October | January to June Priar to January 1, 2020 Balance 5.000,000 95% 2.000,000 1.500.000 400.000 90% 75% 25% Based on the review of collectibility of the account balances in "prior to January 1, 2020 aging category, additional accounts totaling P100,000 are to be written off on December 31, 2020. Effective with the year ended December 31, 2020, the entity adopted a new accounting method for estimating the alowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable Required: a. Determine the allowance for doubtful accounts before adjustment. b. Determine the required allowance for doubtful accounts on December 31, 2020. c. Prepare adjusting entry ta record the doubtful accounts expense for 2020.
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