Problem 6-8 (AICPA Adapted) From inception of operations, Paramount Company provided for uncollectible accounts receivable under the allowance method using the percentage of sales method. The balance in the allowance for doubtful accounts was P500,000 on January 1, 2019. During the current year, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P300,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P50,000. The aging of accounts receivable showed the following summary: Classification Balance Collectible November to December July to October January to June Prior to January 1, 2019 5,000,000 2,000,000 1,000,000 500,000 95% 90% 75% 25% Based on the review of collectibility of the account balances in "prior to January 1, 2019" aging category, additional accounts totaling P100,000 are to be written off on December 31, 2019. Effective with the year ended December 31, 2019, the entity adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable. Required: 1. Determine the allowance for doubtful accounts before adjustment.

Problem 6-8 (AICPA Adapted) From inception of operations, Paramount Company provided for uncollectible accounts receivable under the allowance method using the percentage of sales method. The balance in the allowance for doubtful accounts was P500,000 on January 1, 2019. During the current year, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P300,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P50,000. The aging of accounts receivable showed the following summary: Classification Balance Collectible November to December July to October January to June Prior to January 1, 2019 5,000,000 2,000,000 1,000,000 500,000 95% 90% 75% 25% Based on the review of collectibility of the account balances in "prior to January 1, 2019" aging category, additional accounts totaling P100,000 are to be written off on December 31, 2019. Effective with the year ended December 31, 2019, the entity adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable. Required: 1. Determine the allowance for doubtful accounts before adjustment.

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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