The Dec. 31, 2016, statement of financial position of Leon Company showed Accounts Receivable of P500,000 and Allowance for Bad Debts of P48,000. Following is a summary of accounts receivable transactions recorded by the entity in 2017: Credit sales during the year P3,120,000 Accounts collected during the year 3,008,000 Accounts written off as uncollectible 52,000 Recoveries of accounts written off in the previous year 2,160 On Dec. 31, 2017, an aging of accounts receivable indicated the following: Age group % of total receivable amount Probability of collection Less than 60 days 70% 98% Between 61 and 120 days 18 85 Between 121 and 180 days 10 50 Over 180 days 2 0 Based on the given information and the result of your audit, answer the following: The accounts receivable as of Dec. 31, 2017 is: P550,916 c. P546,684 P548,800 d. P431,200 The allowance for doubtful accounts as of Dec. 13, 2017 is: a. P51,156 c. P40,040 b. P50,764 d. P50,960 The doubtful account expense for the year 2017 is: a. P64,240 c. P64,000 b. P65,920 d. P50,680
The Dec. 31, 2016, statement of financial position of Leon Company showed Accounts Receivable of P500,000 and Allowance for Bad Debts of P48,000. Following is a summary of accounts receivable transactions recorded by the entity in 2017: Credit sales during the year P3,120,000 Accounts collected during the year 3,008,000 Accounts written off as uncollectible 52,000 Recoveries of accounts written off in the previous year 2,160 On Dec. 31, 2017, an aging of accounts receivable indicated the following: Age group % of total receivable amount Probability of collection Less than 60 days 70% 98% Between 61 and 120 days 18 85 Between 121 and 180 days 10 50 Over 180 days 2 0 Based on the given information and the result of your audit, answer the following: The accounts receivable as of Dec. 31, 2017 is: P550,916 c. P546,684 P548,800 d. P431,200 The allowance for doubtful accounts as of Dec. 13, 2017 is: a. P51,156 c. P40,040 b. P50,764 d. P50,960 The doubtful account expense for the year 2017 is: a. P64,240 c. P64,000 b. P65,920 d. P50,680
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
The Dec. 31, 2016, statement of financial position of Leon Company showed Accounts Receivable of P500,000 and Allowance for Bad Debts of P48,000. Following is a summary of accounts receivable transactions recorded by the entity in 2017:
Credit sales during the year P3,120,000
Accounts collected during the year 3,008,000
Accounts written off as uncollectible 52,000
Recoveries of accounts written off in the previous year 2,160
On Dec. 31, 2017, an aging of accounts receivable indicated the following:
Age group % of total receivable amount Probability of collection
Less than 60 days 70% 98%
Between 61 and 120 days 18 85
Between 121 and 180 days 10 50
Over 180 days 2 0
Based on the given information and the result of your audit, answer the following:
The accounts receivable as of Dec. 31, 2017 is:
P550,916 c. P546,684
P548,800 d. P431,200
The allowance for doubtful accounts as of Dec. 13, 2017 is:
a. P51,156 c. P40,040
b. P50,764 d. P50,960
The doubtful account expense for the year 2017 is:
a. P64,240 c. P64,000
b. P65,920 d. P50,680
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