What amount of doubtful account expense should Zee Company report for the current year? What total amount of expenses should X Company recognize in the fourth quarter? What total amount of loss on factoring should Y Company recognize in the current year? Situation 1 Zee Company recorded the following data at the end of the current year:8,000,00020,000,000Accounts receivableCredit salesDoubtful accounts expense (2% of credit sales)400,000The allowance for doubtful accounts on January 1 has a balance of P150,000. The entity elected to estimateits doubtful accounts by using percent of accounts receivable method. The entity estimated that 10% wouldbe a good estimate.Situation 2 On January 1, 2020, X Company purchased machinery for P4,000,000 with a 10-year useful lifeand no residual value. On March 20, 2020, the entity incurred minor repairs and maintenance cost to thisequipment for P300,000.The entity also used the percentage of sales method in estimating doubtful accounts. Doubtful accounts areestimated to be 5% of sales in each quarter.In 2020, the entity followed this procedure for the first three quarters. However, in the fourth quarter, theentity determined that doubtful account expense for the year should be P600,000.Following the calendar year, sales per quarter are first quarter – P1,500.000, second quarter – P1,000,000,third quarter – P2,000,000, and fourth quarter – P1,600,000.Situation 3 Y Company sold accounts receivable with recourse with a face amount of P6,000,000. The factorcharged a service fee of 10% of the accounts factored and withheld 4% of the accounts factored as protectionagainst costumer retums and other adjustments.The fair value of the recourse obligation is determined to be P250,000. The accounts were fully collected bythe factor during the year.

Allowance for doubtful accounts means where we expect some debts to become bad in near future then…

Situation 1 Zee Company recorded the following data at the end of the current year. Accounts receivable 8,000,000 Credit sales 20,000,000 Doubtful accounts expense (2% of credit sales) 400,000 The allowance for doubtful accounts on January 1 has a balance of P150,000. The entity elected to estimate its doubtful accounts by using percent of accounts receivable method. The entity estimated that 10% would be a good estimate.

Situation 1 Zee Company recorded the following data at the end of the current year. Accounts receivable 8,000,000 Credit sales 20,000,000 Doubtful accounts expense (2% of credit sales) 400,000 The allowance for doubtful accounts on January 1 has a balance of P150,000. The entity elected to estimate its doubtful accounts by using percent of accounts receivable method. The entity estimated that 10% would be a good estimate.

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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