Corporation has the following account balances on December 31, 2020: Accounts receivable  ₱ 400,000 Allowance for uncollectible accounts 8,400 Alex completed the following transactions in 2019: Net credit sales, ₱ 4,000,000. Collections on accounts, ₱ 3,870,000. Write-off of uncollectible accounts, ₱ 10,000. Recovery of accounts previously written-off, ₱ 2,000. Uncollectible accounts expense, 2/3 of 1% of net credit sa

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Alex Corporation has the following account balances on December 31,

2020:

Accounts receivable  ₱ 400,000

Allowance for uncollectible accounts 8,400

Alex completed the following transactions in 2019:

  1. Net credit sales, ₱ 4,000,000.
  2. Collections on accounts, ₱ 3,870,000.
  3. Write-off of uncollectible accounts, ₱ 10,000.
  4. Recovery of accounts previously written-off, ₱ 2,000.
  5. Uncollectible accounts expense, 2/3 of 1% of net credit sales.

 

REQUIRED:

1. Journalize the foregoing transactions.

2. Compute the balance of accounts receivable and allowance for uncollectible accounts at December 31, 2020. What amount of Accounts receivable, net would Alex report on its December 31, 2020 balance sheet?

3. Assume that Alex uses the aging of accounts instead of the percent of sales method in estimating  uncollectible  accounts.  Analysis  indicates  that  Php  30,800  of  outstanding accounts  on  December  31,  2020  may  prove  to  be  uncollectible.  Compute  the uncollectible accounts expense and the net realizable value of accounts receivable.

4. Which methods in this case has the higher uncollectible expense account?

 

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