The accountant of Hiddleston Corporation presented to you the following details of its subsidiary ledger in relation to your audit of the company’s accounts receivable balance as of December 31, 2021: Customer Invoice Date Amount Zulu Inc. December 20 550,000 December 1 1,200,000 October 11 950,000 August 4 420,000 Whiskey Co. November 20 2,000,000 September 4 900,000 August 2 500,000 Uniform Inc. December 10 1,750,000 October 4 600,000 July 5 500,000 Uniform Inc. September 9 2,600,000 July 10 1,250,000 March 5 900,000 Romeo Co. December 1 (500,000) Audit notes: a) The company’s term is n/60. b) The company’s general ledger shows the following balances as of December 31, 2021: Accounts receivable P13,650,000 Allowance for doubtful accounts (950,000) c) The credit balance of the receivable resulted from Romeo Co's overpayment of its account. The same shall be settled by a delivery of merchandise the following period. d) You have discovered that Uniform Inc.’s payment of an October 4 invoice amounting to P600,000 was posted against Whiskey Co.’s account for an invoice dated December 4, for the same amount. e) Discussions with the credit department manager revealed the following appropriate credit policy: Accounts receivable age % doubtful of collection Current 2% 1 – 60 days past due 5% 61 – 120 days past due 20% More than 120 days past due 50% Required: 1) How much is the unreconciled difference between the control account and the subsidiary ledger? 2) What is the correct accounts receivable balance as of December 31, 2021? 3) Assuming that there were no other entries affecting the allowance for bad debts, what is the correct bad debt expense for 2021? 4) What is the correct amortized cost of the receivables as of December 31, 2021?
The accountant of Hiddleston Corporation presented to you the following details of its subsidiary ledger in relation to your audit of the company’s
Customer Invoice Date Amount
Zulu Inc. December 20 550,000
December 1 1,200,000
October 11 950,000
August 4 420,000
Whiskey Co. November 20 2,000,000
September 4 900,000
August 2 500,000
Uniform Inc. December 10 1,750,000
October 4 600,000
July 5 500,000
Uniform Inc. September 9 2,600,000
July 10 1,250,000
March 5 900,000
Romeo Co. December 1 (500,000)
Audit notes:
a) The company’s term is n/60.
b) The company’s general ledger shows the following balances as of December 31, 2021:
Accounts receivable P13,650,000
Allowance for doubtful accounts (950,000)
c) The credit balance of the receivable resulted from Romeo Co's overpayment of its account. The same shall be settled by a delivery of merchandise the following period.
d) You have discovered that Uniform Inc.’s payment of an October 4 invoice amounting to P600,000 was posted against Whiskey Co.’s account for an invoice dated December 4, for the same amount.
e) Discussions with the credit department manager revealed the following appropriate credit policy:
Accounts receivable age % doubtful of collection
Current 2%
1 – 60 days past due 5%
61 – 120 days past due 20%
More than 120 days past due 50%
Required:
1) How much is the unreconciled difference between the control account and the subsidiary ledger?
2) What is the correct accounts receivable balance as of December 31, 2021?
3) Assuming that there were no other entries affecting the allowance for
4) What is the correct amortized cost of the receivables as of December 31, 2021?
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