What amount should be reported as interest income for 2019? P80,000 P240,000 P60,000 P110,000 What amount should be reported as doubtful accounts expense for 2019? P410,000 P425,000 P110,000 P535,000
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.
Nabangsit Corporation reported the following receivables on December 31, 2018:
Interest receivable 190,000
Notes receivable 4,000,000
Additional information:
- The notes receivable comprised of the following:
- P3,000,000 note dated March 31, 2018, with principal and 8% interest payable on March 31, 2019.
- P1,000,000 note dated October 31, 2018, with principal and interest payable on October 31, 2019.
- During 2019, sales revenue totaled P21,200,000, cash collected from customers amounted to P19,800,000, and P410,000 in accounts receivable were written off. All sales are made on credit basis.
- Doubtful accounts expense is recorded at year-end by adjusting the allowance account to an amount equal to 10% of year-end accounts receivable.
- What amount should be reported as interest income for 2019?
- P80,000 P240,000
- P60,000 P110,000
- What amount should be reported as doubtful accounts expense for 2019?
- P410,000 P425,000
- P110,000 P535,000
Step by step
Solved in 2 steps
