PROBLEM 1
Computation of Accounts Receivable Balance
Shown below is GOROSPE COMPANY's aging schedule of its
accounts receivable on December 31, 2023.
Balance Days Past
Due
Customers Due Current 1-30 31-60 Over 60
AA. Co. P23,000 P0 P0 P23,000 P0
BB. Inc. 105,000 62,000 20,000 13,000 10,000
CC. Corp. 87,500 23,000 14,500 10,000 40,000
DD. Inc. 93,500 53,000 20,500 10,000 10,000
EE 40,000 0 0 0 40,000
Transport
FF. Inc. 31,000 15,000 16,000 0 0
GG Co. 1,000 1,000 0 0 0
HH Corp. 64,000 20,000 18,000 16,000 10,000
II 60,000 60,000 0 0 0
Company
Totals P505,00 P234,0 P89,000 P72,000 P110,000
0 00
The accounts receivable balance per general ledger is P505,000 on
December 31, 2023. The following are audit comments for possible
adjustments:
AA Co.
Merchandise found defective; returned by the customer on November 10
for credit, but the credit memo was issued by Gorospe only on January 2,
2024.
BB, Inc.
Account is good but usually pays late.
CC Corp.
Merchandise worth P40,000 destroyed in transit on June 4, 2023. The
carrier was billed on July 1. (See EE Transport and II Company)
DD, Inc.
Customer billed twice in error for P10,000. Balance is collectible.
EE Transport
Collected in full on January 15, 2024.
FF, Inc.
Paid in full on December 29, 2023, but not recorded. Collections were
deposited January 3, 2024.
GG Co.
Received account confirmation from customer for P11,000. Investigation
revealed an erroneous credit for P10,000. (See HH Corp.)
HH Corp.
Neglected to post P10,000 credit to customer's account.
II Company
Customer wants to know the reason for receipt of P40,000 credit memo
as its account payable balance is P100,000.
REQUIRED:
Based on the foregoing information, what should be the adjusted balance
of the Accounts receivable - trade at December 31, 2023?
PROBLEM 2
Sales Cutoff Test
DAFFODIL AUTO PARTS sells new parts to auto dealers. Company policy requires
that a prenumbered shipping document, be issued for each sale. At the time of
pickup or shipment, the shipping clerk writes the date on the shipping document.
The last shipment made in theyear ended December 31, 2023, was recorded on
document 3167. Shipments are billed in the order that the billing clerk receives the
shipping documents.
For late December 2023 and early January 2024, shipping documents are billed on
sales invoices as follows:
Shipping Sales
Document No. Invoice
No.
3163 5332
3164 5326
3165 5327
3166 5330
3167 5331
3168 5328
3169 5329
3170 5333
3171 5335
3172 5334
The December, 2023 and January 2024 sales journals have the
following information included:
SALES JOURNAL - DECEMBER 2023
Day of Month Sales Invoice No. Amount of Sale
3 532 P 72,611
0 6
3 532 191,430
0 9
3 532 41,983
1 7
3 532 62,022
1 8
3 533 4,774
1 0
SALES JOURNAL - JANUARY 2024
Day of Month Sales Invoice No. Amount of Sale
1 533 P264,131
2
1 533 10,639
1
1 533 85,206
3
2 533 125,050
5
2 533 64,658
4
1. What is the net overstatement (understatement) of Daffodil's sales
for the year ended December 31, 2023?
A. P21,318 C. (P253,452)
B. P253,452 D. (P21,318)
PROBLEM 3
Presented below are unrelated situations. Answer the question relating to each
situation.
1. The following information is from GUMAMELA CORP.'s first year of operations:
● Merchandise purchased P450,000
● Ending merchandise inventory 123,000
● Collections from customer 150,000
● All sales are on account and
good sell at 30% above set
What is the accounts receivable balance at the end of the
company’s first year of operations?
2. BANANA CO. reported the following information at the end of
its first year of operations, December 31, 2023:
Doubtful accounts expense for 2023 P271,000
Uncollectible accounts written off during 2023 35,400
Net realizable value of accounts receivable 895,000
What is the accounts receivable balance at December 31, 2023?
3. MAHOGANY COMPANY’s analysis and aging of its accounts
receivable at December 31, 2023, disclosed the following:
● Accounts receivable P460,000
● Accounts estimated to be uncollectible (per aging) 95,000
● Allowance for doubtful accounts (per books) 103,000
What is the net realizable value of Mahogany’s receivables at December 31,
2023?
4. The following amounts are shown on the 2023 and 2022 financial
statements of SAN FRANCISCO CO.:
2023 2022
Accounts receivable ? 470,000
Allowance for doubtful 20,000 10,000
accounts
Net sales 2,600,000 2,400,0
00
Cost of goods sold 1,900,000 1,752,0
00
San Fransisco Co.’s accounts receivable turnover for 2023 is 6.5 times What
is the accounts receivable balance at December 31, 2023?
PROBLEM 4
LAGUNDI COMPANY applies the allowance method to value its accounts
receivable. The company estimates its uncollectible accounts based on
past experience, which indicates that 1.5% of net credit sales will be
uncollectible. Its total sales for the year ended December 31, 2023,
amounted to P4,000,000 including cash sales of P400,000. After a
thorough evaluation of the accounts receivable from Nolog Company
amounting to P20,000, Lagundi has decided to write off this account
before year-end adjustments are made.
Shown below are Lagundi's account balances at December 31,
2023, before any adjustments and the P20,000 write off.
Sales P4,000,000
Accounts receivable 1,500,000
Sales discounts 250,000
Allowance for credit loss 33,000
Sales returns and allowances 350,000
Expected credit loss 0
Lagundi has decided to value its accounts receivable using the statement
of financial position approach as suggested by its external auditors.
Presented below is the aging of the accounts receivable subsidiary
ledger accounts at December 31, 2023.
Accounts Balance Less than 61-90 91-120 Over
60 days days 120 days
days
Antiporda P100,00 P100,000
0
Balbakwa 256,000 180,000 P76,000
Curdapia 654,000 500,000 154,000
Dagul 50,000 P50,000
Empoy 420,000 P420,000
Total P1,480, P780,00 P230,00 P420,00 P50,000
000 0 0 0
% collectible 99% 95% 85% 60%
1. The entry to write off Lagundi’s accounts receivable from
Nolog of P20,000 will
A. Decrease total assets and net income for 2023
B. Increase total assets and decrease net income for 2023
C. Have no effect on total assets and net income for 2023
D. Have no effect on total assets and increase net income for 2023
2. Lagundi’s doubtful accounts expense for 2023 based on net credit sales is
A. P60,000 C. P45,000
B. P12,000 D. P56,250
3. The final entry to adjust the allowance for doubtful accounts is __________
4. What is the net realizable value of Lagundi’s
accounts receivable on December 31, 2023?
A. P1,435,700 C. P1,397,700
B. P1,435,000 D. P1,377,700
