Nova Accounts receivable, net of P520,000 allowance 2018: for doubtful accounts Interest receivable Notes receivable 3,840,000 190,000 4,000,000 , The notės receivable comprised: P1.000,000 note dated October 31, 2018, with principal and interest payable on October 31, 2019. P3.000,000 note dated March 31, 2018, with principal and 8% interest payable on March 31, 2019. • During 2019, sales revenue totaled P21,200,000, P19,800,000 cash was collected from customers, and P410,000 in accounts receivable were written off. All sales are made on a credit basis. • Doubtful accounts expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable. 1. What amount should be reported as interest income for 2019? а. 110,000 b. 240,000 60,000 d. 80,000 с. 2. What amount should be reported as doubtful accounts expense for 2019? a. 535,000 b. 425,000 c. 110,000 d. 410,000

Nova Accounts receivable, net of P520,000 allowance 2018: for doubtful accounts Interest receivable Notes receivable 3,840,000 190,000 4,000,000 , The notės receivable comprised: P1.000,000 note dated October 31, 2018, with principal and interest payable on October 31, 2019. P3.000,000 note dated March 31, 2018, with principal and 8% interest payable on March 31, 2019. • During 2019, sales revenue totaled P21,200,000, P19,800,000 cash was collected from customers, and P410,000 in accounts receivable were written off. All sales are made on a credit basis. • Doubtful accounts expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable. 1. What amount should be reported as interest income for 2019? а. 110,000 b. 240,000 60,000 d. 80,000 с. 2. What amount should be reported as doubtful accounts expense for 2019? a. 535,000 b. 425,000 c. 110,000 d. 410,000

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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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

Accounts receivable, net of P520,000 allowance
va Company reported the following receivables on December 31,
2018:
for doubtful accounts
Interest receivable
Notes receivable
3,840,000
190,000
4,000,000
• The notës receivable comprised:
P1.000,000 note dated October 31, 2018, with principal and
interest payable on October 31, 2019.
P3.000,000 note dated March 31, 2018, with principal and 8%
interest payable on March 31, 2019.
• During 2019, sales revenue totaled P21,200,000, P19,800,000
cash was collected from customers, and P410,000 in accounts
receivable were written off. All sales are made on a credit basis.
• Doubtful accounts expense is recorded at year-end by adjusting
the allowance account to an amount equal to 10% of year-end
accounts receivable.
1. What amount should be reported as interest income for 2019?
а. 110,000
b. 240,000
60,000
d.
с.
80,000
2. What amount should be reported as doubtful accounts expense for
2019?
a. 535,000
b. 425,000
c. 110,000
d. 410,000

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