The recorded allowance for doubtful accounts should be increased by LISUD AYO Corporation, provided for uncollectible accounts receivable under the allowance method since the start of its operationsto December 31, 2016. Provisions were made monthly at 2 percent of credit sales; bad debts written off were charged to thealloawance account; recoveries of bad debts previously written off were credited to the allowance; and no year-end adjustments to theallowance account were made. LISUD AYO credit terms are net 30 days.The credit balance in the allowance for doubtful accounts was P260,000 at January 1, 2016. During 2016, credit sales totalledP18,000,000, interim provisions for doubtful accounts were made at 2 percent of credit sales, P180,000 of bad debts were written off,and recoveries of accounts previously written off amounted to P30,000. LISUD AYO installed a computer system in November 2016and an aging of accounts receivable was prepared for the first time as of December 31, 2016. A summary of the aging is as follows:Balance in Each CategoryEstimated % UncollectibleClassifications by Month ofsalesNovember-December 2016P2,280,0001,200,0002%15%July-October 2016January-June 201625%800,000260,000Prior to January 1, 201680%Based on the review of collectability of the account balances in the "prior to January 1, 2016" aging category, additional receivabletotalling P120,000 were written off as of December 31, 2016. Effective with the year ended December 31, 2016, LISUD AYO adopteda new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis ofaccounts receivable.The recorded allowance for doubtful accounts should be increased by

Uncollectible accounts are those accounts for which it is estimated that due amount will not be…

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The recorded allowance for doubtful accounts should be increased by

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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Question

The recorded allowance for doubtful accounts should be increased by

LISUD AYO Corporation, provided for uncollectible accounts receivable under the allowance method since the start of its operations
to December 31, 2016. Provisions were made monthly at 2 percent of credit sales; bad debts written off were charged to the
alloawance account; recoveries of bad debts previously written off were credited to the allowance; and no year-end adjustments to the
allowance account were made. LISUD AYO credit terms are net 30 days.
The credit balance in the allowance for doubtful accounts was P260,000 at January 1, 2016. During 2016, credit sales totalled
P18,000,000, interim provisions for doubtful accounts were made at 2 percent of credit sales, P180,000 of bad debts were written off,
and recoveries of accounts previously written off amounted to P30,000. LISUD AYO installed a computer system in November 2016
and an aging of accounts receivable was prepared for the first time as of December 31, 2016. A summary of the aging is as follows:
Balance in Each Category
Estimated % Uncollectible
Classifications by Month of
sales
November-December 2016
P2,280,000
1,200,000
2%
15%
July-October 2016
January-June 2016
25%
800,000
260,000
Prior to January 1, 2016
80%
Based on the review of collectability of the account balances in the "prior to January 1, 2016" aging category, additional receivable
totalling P120,000 were written off as of December 31, 2016. Effective with the year ended December 31, 2016, LISUD AYO adopted
a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of
accounts receivable.
The recorded allowance for doubtful accounts should be increased by

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