More than 120 days past due 50% Requirements: 1. How much is the unreconciled difference between the control account the subsidiary ledger? 2. What is the correct accounts receivable balance as of December 31, 2014? 3. Assuming that there were no other entries affecting the allowance for bad debts, what is the correct bad debt expense for 2014? 4. What is the correct amortized cost of the receivables as of December 31, 2014?
More than 120 days past due 50% Requirements: 1. How much is the unreconciled difference between the control account the subsidiary ledger? 2. What is the correct accounts receivable balance as of December 31, 2014? 3. Assuming that there were no other entries affecting the allowance for bad debts, what is the correct bad debt expense for 2014? 4. What is the correct amortized cost of the receivables as of December 31, 2014?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Whiskey Co.
November 20
September 4
August 2
2,000,000
900,000
500,000
Uniform Inc.
December 10
1,750,000
600,000
500,000
October 4
July 5
September 9
July 10
March 5
Tango Corp.
2,600,000
1,250,000
900,000
Romeo Co.
December 1
(500,000)
Audit notes:
a. The company's term is n/60 days.
b. The company's general ledger shows the following balances as of December 31, 2014:
Accounts Receivable
Allowance for doubtful accounts
P13,650,000
(950,000)
c. The credit balance of the receivable resulted from Romeo Co.'s overpayment of its
account. The same shall be settled by a delivery of merchandise the following period.
d. You have discovered that Uniform Inc.'s payment of an October 4 invoice amounting
to P600,000 was posted against Whiskey Co.'s account for an invoice Dated December
4, for the same amount.
e. Discussions with the credit department manager revealed the following appropriate
credit policy:
Accounts receivable age
Current
1-60 days past due
61-120 days past due
More than 120 days past due
% doubtful of collection
2%
5%
20%
50%
Requirements:
1. How much is the unreconciled difference between the control account the subsidiary
ledger?
2. What is the correct accounts receivable balance as of December 31, 2014?
3. Assuming that there were no other entries affecting the allowance for bad debts, what is
the correct bad debt expense for 2014?
4. What is the correct amortized cost of the receivables as of December 31, 2014?
Transcribed Image Text:The accountant of Mahoganny Corp. presented to you the following details of its subsidiary
ledger in relation to your audit of the company's accounts receivable balance as of December
31, 2014:
Invoice Date
Amount
Customer
Zulu Inc.
550,000
1,200,000
950,000
420,000
December 20
December 1
October 11
August 4
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