HOMEWORK

RECEIVABLES

Problem 1
ADA, beginning 120,000
Bad debts expense 160,000
Writeoffs (80,000)
ADA, ending 200,000
NRV of AR 2,000,000
Gross amount of AR 2,200,000

Problem 2
Installment accounts due in 2024 430,000
Due from regular customers 990,000
Accounts receivable - current 1,420,000

Installment accounts due after 2024 - noncurrent 440,000

Problem 3
Cost of goods sold (320,000-70,000) 250,000
Sales rate 140%
Sales on account/accounts receivable 350,000
Collection -198,000
Correct accounts receivable 152,000

Correct accounts receivable 152,000

Reported accounts receivable -120,000
Shortage 32,000

Problem 4
1. 1.5% of net credit sales
Net credit sales (P10,000,000 - P70,000) 9,930,000
Rate 1.50%
Doubtful accounts expense 148,950
Allowance for doubtful accounts, Jan. 1 40,000
Accounts written off -120,000
Allowance for doubtful accounts, Dec. 31 68,950

2. 7.5% of AR
Accounts receivable, Dec. 31 2,680,000
Rate 7.50%
Allowance for doubtful accounts, Dec. 31 201,000
Allowance for doubtful accounts, Jan. 1 (40,000)

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 Accounts written off 120,000
Doubtful accounts expense 281,000

Problem 5
Net realizable value 1,050,000
Allowance for doubtful accounts, Dec. 31
Allowance for doubtful accounts, Jan. 1 75,000
Doubtful accounts expense 120,000
Accounts written off -50,000 145,000
Gross accounts receivable, Dec. 31 1,195,000

Problem 6
Allowance for doubtful accounts, 2023 200,000
Allowance for doubtful accounts, 2022 150,000
Accounts written off -205,000 -55,000
Doubtful accounts expense 255,000
Note: collection (recovery) of written off account is recognized as income.

Problem 7
1 Allowance for doubtful accounts, Jan. 1 143,000
Recorded doubtful accounts expense (P15M x 3%) 450,000
Accounts written off -140,000
Additional writeoff -120,000
Allowance for doubtful accounts, Dec. 31, unadjusted 333,000

2 Category Uncollectible
November-December (P2,160,000 x 2%) 43,200
July-October (P1,300,000 x 10%) 130,000
January-June (P840,000 x25%) 210,000
Prior to Jan. 1 (P180,000 x 70%) 126,000
Required allowance/ADA, end 509,200

Required allowance / ADA, end 509,200

Allowance for doubtful accounts, Dec. 31, unadjusted -333,000
Additional expense 176,200

3 Interim doubtful accounts expense 450,000

Additional expense 176,200
Total doubtful accounts expense 626,200

4 Accounts receivable Dec. 31 4,480,000

Allowance for doubtful accounts, Dec. 31, adjusted -509,200
Net realizable value 3,970,800

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Problem 8
White's books
03-Jan Cash 2,100,000
Commission expense 450,000
Receivable from factor 300,000
Allowance for doubtful accounts 150,000
Accounts receivable 3,000,000
31-Jan Cash 250,000
Receivable from factor 250,000

Green's books
03-Jan Accounts receivable 3,000,000
Cash 2,100,000
Commission Income 450,000
Client retainer 300,000
Allowance for doubtful accounts 150,000
31-Jan Cash 2,500,000
Accounts Receivable 2,500,000

31-Jan Client retainer 250,000

Cash 250,000

Problem 9
1 Original note 4,500,000
Payment applied to principal: [(3.4M-160,000) - (4.5M x 1.25%)] (3,183,750)
Note payable from assignment 1,316,250
Note payable from pledging 400,000
Note payable, Dec. 31 1,716,250

2 AR assigned 5,000,000
Face value collected (3,400,000) 1,600,000
Note payable, Dec. 31 (1,316,250)
Equity on assigned accounts 283,750

3 Face value 1,200,000

Interest to maturity 100,000
Maturity value 1,300,000
Discount (32,500)
Proceeds 1,267,500

4 Gross amount 1,800,000

Carrying amount 1,600,000
ADA debited 200,000

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Problem 10
Receivable Note
Beginning balance 6,000,000 4,800,000
Collection (1,800,000) (1,782,000)
Writeoffs (80,000)
Sales allowance (20,000)
Balance, Feb. 28 4,100,000 3,018,000

1 Accounts receivable - assigned, Feb. 28 4,100,000

Note payable, Feb. 28 3,018,000
Equity on assigned accounts, Feb. 28 1,082,000

2 April collections 4,100,000

Note payable, Feb. 28 (3,018,000)
Interest incurred (50,000)
Cash received 1,032,000

Actual Base Higher

3 AS of Feb. 28 72,000 50,000 72,000
As of Apr. 30 45,270 50,000 50,000
Interest incurred 122,000

Problem 11

Principal 5,000,000

Interest 375,000

Maturity value 5,375,000

Discount (376,250)

Proceeds 4,998,750

Problem 12

1 PV of principal 2,455,653 (4M x 0.613913) 160.00

PVOA of interest 1,235,478 (4M x .04 x 7.721734)

PV of note 3,691,131

Interest
Date Income Cash Receipt Amortization Carrying value

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 1/1/23 3,691,131

6/30/23 184,557 160,000 24,557 3,715,687

12/31/23 185,784 160,000 25,784 3,741,471

6/30/24 187,074 160,000 27,074 3,768,545

12/31/24 188,427 160,000 28,427 3,796,972

6/30/25 189,849 160,000 29,849 3,826,821

12/31/25 191,341 160,000 31,341 3,858,162

6/30/26 192,908 160,000 32,908 3,891,070

12/31/26 194,554 160,000 34,554 3,925,624

6/30/27 196,281 160,000 36,281 3,961,905

12/31/27 198,095 160,000 38,095 4,000,000

2 Interest, 6/30/24 187,074 3 CV, 12/31/25 3,858,162

Interest, 12/31/24 188,427

Total interest, 2024 375,501

4 Face value 4,000,000

Carrying value, 12/31/26 3,925,624

Unamortized
discount 74,376

Problem 13 5%
Present
1 Date Principal Interest Total PV factor value

06/30/2023 1,000,000 300,000 1,300,000 0.956938 1,244,019

12/31/2023 1,000,000 250,000 1,250,000 0.915730 1,144,662

06/30/2024 1,000,000 200,000 1,200,000 0.876297 1,051,556

12/31/2024 1,000,000 150,000 1,150,000 0.838561 964,346

06/30/2025 1,000,000 100,000 1,100,000 0.802451 882,696

12/31/2025 1,000,000 50,000 1,050,000 0.767896 806,291

Amount at initial recognition 6,093,570

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 4.5%
Interest Carrying
Date income Cash receipt Amortization amount
01/01/2022 6,093,570

06/30/2023 274,211 1,300,000 (1,025,789) 5,067,780

12/31/2023 228,050 1,250,000 (1,021,950) 4,045,830

06/30/2024 182,062 1,200,000 (1,017,938) 3,027,893

12/31/2024 136,255 1,150,000 (1,013,745) 2,014,148

2 Interest income, June 30 274,211

Interest income, December 31 228,050

Interest income,
2023 502,261

3 Carrying amount, Dec. 31, 2024 2,014,148

Problem 14
PV of note: n=15,
1 i=3%

P250,000 x 12.561102 2,984,483.77

1st installment 250,000.00

PV of note, Jan. 1,
2023 3,234,483.77

2 Installment Interest Carrying

Income Amount

Jan. 1, 2023 3,234,483.77

Jan. 1, 2023 250,000.00 2,984,483.77

Apr. 1, 2023 250,000.00 89,534.51 2,824,018.28

Jul. 1, 2023 250,000.00 84,720.55 2,658,738.83

2,488,501.0
Oct. 1 , 2023 250,000.00 79,762.17 0

Dec. 31, 2023 74,655.03 2,563,156.03

Interest income in
2023 328,672.26

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3 Installment Interest Carrying
Income Amount

Jan. 1, 2023 3,234,483.77

Jan. 1, 2023 250,000.00 2,984,483.77

Apr. 1, 2023 250,000.00 89,534.51 2,824,018.28

Jul. 1, 2023 250,000.00 84,720.55 2,658,738.83

2,488,501.0
Oct. 1 , 2023 250,000.00 79,762.17 0

Dec. 31, 2023 74,655.03 2,563,156.03

Jan. 1, 2024 250,000.00 2,313,156.03

Apr. 1, 2024 250,000.00 69,394.68 2,132,550.71

Jul. 1, 2024 250,000.00 63,976.52 1,946,527.23

Oct. 1 , 2024 250,000.00 58,395.82 1,754,923.05

Dec. 31, 2024 52,647.69 1,807,570.74

OR
PV of note: n=8,
i=3%

P250,000 x 7.019692 1,754,923.05

Interest, 4th qtr
2024 52,647.69

Carrying amount, Dec. 31, 2024 1,807,570.74

Problem 15
1 From sale of plant:
Balance, Dec. 31, 2023 2,000,000
Installment to be paid on Apr. 1, 2024 (1,000,000) 1,000,000
From officer 800,000
From sale of equipment:
Present value of note (P400,000 x 0.79719) 318,876
Amortization of discount (P318,878 x .12 x 9/12) 28,699 347,575
From sale of land:
Principal 1,400,000
Current portion
Installment, July 2023 451,250
Interest (P1,400,000 x .11) (154,000) (297,250) 1,102,750
Total noncurrent notes receivable, Dec. 31, 2023 3,250,325

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2 From sale of plant 1,000,000
From sale of land 297,250
Current portion of notes receivable 1,297,250

3 From sale of plant: Apr. 1 - Dec. 31, 2023

P2,000,000 x .12 x 9/12 180,000
From sale of land: July 1 - Dec. 31, 2023
P1,400,000 x .11 x 6/12 77,000
Total accrued interest receivable 257,000

4 Face value 400,000

Carrying amount -347,575
Unamortized discount 52,425

5 From sale of plant:

Jan.1-Mar.31 (P3,000,000 x .12 x 3/12) 90,000
Apr.1 - Dec. 31 180,000 270,000
From officer (P800,000 x .10) 80,000
From sale of equipment 28,699
From sale of land 77,000
Total interest revenue - 2023 455,699