Flappable Company began operations on danuary 1, 2017. The entity provided for doubtful accounts based on 5% of annual credit sales in prior years. On January 1, 2020, the entity changed the method of determining the allowance for doubtful accounts using an aging schedule. 2020 2019 2018 2017 Credit sales Collections excluding recovery Accounts written off during year Recovery of accounts written off 15,000,000 9,500,000 8,000,000 6,000,000 11,700,000 8,200,000 6,700,000 4,500,000 200,000 100,000 80,000 35,000 None 120,000 40,000 None Days Account Outstanding Amount Probability of Collection 30 days or less Between 31 and 60 days Between 61 and 180 days Between 18l and one year Over one year-to be written off 3,000,000 1,500,000 1,200,000 1,200,000 100,000 95% 80% 75% 50% 0% 1. What amount should be reported as allowance for doubtful accounts on December 31, 2020? a. 1,350,000 b. 1,450,000 c. 1,250,000 d. 1,000,000 2. What amount should be reported as doubtful accounts expense for the current year? a. 500,000 b. 600,000 c. 700,000 d. 400,000 3. What is the net realizable value of accounts receivable on December 31, 2020? a. 6,900,000 b. 7,000,000 c. 5,550,000 d. 5,650,000

Flappable Company began operations on danuary 1, 2017. The entity provided for doubtful accounts based on 5% of annual credit sales in prior years. On January 1, 2020, the entity changed the method of determining the allowance for doubtful accounts using an aging schedule. 2020 2019 2018 2017 Credit sales Collections excluding recovery Accounts written off during year Recovery of accounts written off 15,000,000 9,500,000 8,000,000 6,000,000 11,700,000 8,200,000 6,700,000 4,500,000 200,000 100,000 80,000 35,000 None 120,000 40,000 None Days Account Outstanding Amount Probability of Collection 30 days or less Between 31 and 60 days Between 61 and 180 days Between 18l and one year Over one year-to be written off 3,000,000 1,500,000 1,200,000 1,200,000 100,000 95% 80% 75% 50% 0% 1. What amount should be reported as allowance for doubtful accounts on December 31, 2020? a. 1,350,000 b. 1,450,000 c. 1,250,000 d. 1,000,000 2. What amount should be reported as doubtful accounts expense for the current year? a. 500,000 b. 600,000 c. 700,000 d. 400,000 3. What is the net realizable value of accounts receivable on December 31, 2020? a. 6,900,000 b. 7,000,000 c. 5,550,000 d. 5,650,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following accounts are available from the unadjusted trial balance of the company at December 31, 2021: Accounts Receivable – P10,000,000 debit; Allowance for doubtful accounts – P80,000 debit; Net credit sales – P40,000,000 credit. The company estimates that 3% of the gross accounts receivable will become uncollectible. After the adjustment at December 31, 2021, the allowance for doubtful accounts should have a credit balance of how much?
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