RMM Company disclosed the following information on December 31, 2021: Accrued rent expense 54,000 Share dividends payable 750,000 Accounts receivable, after deducting credit balances of customers’ accounts amounting to ₱42, 500 179,300 Estimated premium liability 65,800 Cash in bank, net of bank overdraft of ₱22,650 481,900 Deferred tax liability 215,500 Accounts payable, net of debit balances in suppliers’ accounts amounting to ₱8,310 95,420 Unearned interest income 225,000 Mortgage payable, issued on March 1, 2012, maturing after 10 years 1,500,000 Notes payable due to bank, 12% interest bearing note payable yearly, issued on August 31, 2021, maturing on August 31, 2022 1,000,000 Cash dividends payable 520,000 SSS payable 57,100 Serial bonds payable in 5 yearly installment of ₱250,000 payable every October 31 1,250,000 Estimated damages because of a supposed unsatisfactory performance on a contract, a possible obligation 75,000 Income tax payable 138,500 Notes payable 460,000 1. Compute for the current liabilities as of December 31, 2021 2. Compute for the non-current liabilities as of December 31, 2021 3. In the case of the notes payable due to the bank, supposing the entity has the discretion to refinance the obligation for at least 12 months after the given maturity date, as seen in its loan agreement, A. Compute for the current liabilities as of December 31, 2021. B. Compute for the non-current liabilities as of December 31, 2021.
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.
RMM Company disclosed the following information on December 31, 2021:
| Accrued rent expense | 54,000 |
| Share dividends payable | 750,000 |
| 179,300 | |
| Estimated premium liability | 65,800 |
| Cash in bank, net of bank overdraft of ₱22,650 | 481,900 |
| 215,500 | |
| Accounts payable, net of debit balances in suppliers’ accounts amounting to ₱8,310 | 95,420 |
| Unearned interest income | 225,000 |
| Mortgage payable, issued on March 1, 2012, maturing after 10 years | 1,500,000 |
| Notes payable due to bank, 12% interest bearing note payable yearly, issued on August 31, 2021, maturing on August 31, 2022 | 1,000,000 |
| Cash dividends payable | 520,000 |
| SSS payable | 57,100 |
| Serial bonds payable in 5 yearly installment of ₱250,000 payable every October 31 | 1,250,000 |
| Estimated damages because of a supposed unsatisfactory performance on a contract, a possible obligation | 75,000 |
| Income tax payable | 138,500 |
| Notes payable | 460,000 |
1. Compute for the current liabilities as of December 31, 2021
2. Compute for the non-current liabilities as of December 31, 2021
3. In the case of the notes payable due to the bank, supposing the entity has the discretion to refinance the obligation for at least 12 months after the given maturity date, as seen in its loan agreement,
A. Compute for the current liabilities as of December 31, 2021.
B. Compute for the non-current liabilities as of December 31, 2021.
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