PROBLEM 2 DI-TWO Corporation had the following accounts and their balances on December 31 before any adjustments: Sales P5,000,000 |Accounts Receivable |600,000 Allowance for doubtful accounts 25,000 Required: 1. Assuming on December 31, 2019, the Company determined that 2% of sales is uncollectible. a. What is the adjusting entry to recognize this? (show solutions) b. What is the balance of the allowance for doubtful accounts after effecting the adjustment? c. What is the net realizable balance of the accounts receivable? 2. Assuming on December 31, 2019, the company determined that 4% of accounts receivable is deemed uncollectible. a. What is the adjusting entry to recognize this? (show solutions) b. What is the balance of the allowance for doubtful accounts after effecting the adjustment? c. What is the net realizable balance the accounts receivable?
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.
![PROBLEM 2
DI-TWO Corporation had the following accounts
and their balances on December 31 before any
adjustments:
Sales
P5,000,000
|Accounts Receivable
600,000
Allowance for doubtful
accounts
25,000
Required:
1. Assuming on December 31, 2019, the Company
determined that 2% of sales is uncollectible.
a. What is the adjusting entry to recognize
this? (show solutions)
b. What is the balance of the allowance for
doubtful accounts after effecting the adjustment?
c. What is the net realizable balance of the
accounts receivable?
2. Assuming on December 31, 2019, the company
determined that 4% of accounts receivable is
deemed uncollectible.
a. What is the adjusting entry to recognize
this? (show solutions)
b. What is the balance of the allowance for
doubtful accounts after effecting the adjustment?
c. What is the net realizable balance of the
accounts receivable?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F47670d53-29a6-4316-82db-ccbc7d9835fd%2Fac18821e-5c14-417b-ab7e-a013babeb163%2F76w8zbf_processed.jpeg&w=3840&q=75)
![PROBLEM 1
MBS Inc. acquires a building on February 1, 2019
at a cost of P5,500,000. The building has an
estimated useful life of 40 years and an estimated
salvage value of P500,000.
Required:
a. Prepare the following:
i. journal entry to record the purchase of
building.
ii. Adjusting entry on December 31 assuming
the company prepares its financial statements on
this date.
b. Determine the following (show solution):
i. amount of expense to be recognized for 2019
ii. book value of the building as of December 31,
2019.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F47670d53-29a6-4316-82db-ccbc7d9835fd%2Fac18821e-5c14-417b-ab7e-a013babeb163%2F290inc6_processed.jpeg&w=3840&q=75)
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