Question 1
Pasado Company is engaged in the sale of various home and office furnishings. It caters to both cash and credit
customers. The following transactions affecting the accounts receivable of Pasado Company took place during 2021:
Sales (cash and credit) 591,050
Cash received from cash customers 205,175
Cash received from credit customers (P281,030 was received
from customers who took advantage of the discount feature
of the company’s credit terms 3/10, n/30) 320,800
Accounts written off as worthless 4,955
Credit memoranda issued to customers for sales returns and allowances 26,275
Cash refunds given to cash customers for sales returns and allowances 16,972
Recoveries on accounts written off as uncollectible in prior periods
(not included in cash collections stated above) 6,615
An aging of the receivables indicates that P17,300 of the accounts receivables balance are deemed uncollectible.
The following balances were taken from the December 31, 2020 statement of financial position:
Accounts Receivable- P95,842
Allowance for Bad Debts- P9,740
What are the balances of Accounts Receivable and Allowance for Bad Debts that would be shown in the December 31,
2021 statement of financial position?
a. 120,987 and 17,300
b. 120,987 and 11,400
c. 120,987 and 9,740
d. 120,987 and 5,900
Question 2
Pasado Company is engaged in the sale of various home and office furnishings. It caters to both cash and credit
customers. The following transactions affecting the accounts receivable of Pasado Company took place during 2021:
Sales (cash and credit) 591,050
Cash received from cash customers 205,175
Cash received from credit customers (P281,030 was received
from customers who took advantage of the discount feature
of the company’s credit terms 3/10, n/30) 320,800
Accounts written off as worthless 4,955
Credit memoranda issued to customers for sales returns and allowances 26,275
Cash refunds given to cash customers for sales returns and allowances 16,972
Recoveries on accounts written off as uncollectible in prior periods
(not included in cash collections stated above) 6,615
An aging of the receivables indicates that P17,300 of the accounts receivables balance are deemed uncollectible.
The following balances were taken from the December 31, 2020 statement of financial position:
Accounts Receivable- P95,842
Allowance for Bad Debts- P9,740
What is the amount of bad debts expense reported in profit or loss for the year ended December 31, 2021?
a. 5,900
b. 9,740
c. 17,300
d. 11,400
Question 3
The following transactions affecting the accounts receivable occurred during the year ended December 31, 2021:
Sales on account 3,000,000
Cash received from customers 3,200,000
Cash received includes the following:
Customers paying within the 10 day discount period 1,746,000
Customers paying within the 20 day discount period 990,000
Recovery of accounts written off 6,000
Customers paying beyond the discount period ????
Accounts receivable written off as worthless 22,000
Credit memoranda for sales returns 12,000
An aging of the accounts receivable and estimate of uncollectible accounts at December 31, 2021 revealed the following:
Age Amount Probability of Uncollectibility
Less than 30 days 150,000 2%
31-90 days 120,000 8%
91-120 days 86,000 15%
More than 120 days balance 30%
What are the balances of accounts receivable and the realted allowance accounts at December 31, 2021?
a. 382,000 and 25,300
b. 376,000 and 33,300
c. 376,000 and 25,300
d. 382,000 and 33,300
Question 4
The following transactions affecting the accounts receivable occurred during the year ended December 31, 2021:
Sales on account 3,000,000
Cash received from customers 3,200,000
Cash received includes the following:
Customers paying within the 10 day discount period 1,746,000
Customers paying within the 20 day discount period 990,000
Recovery of accounts written off 6,000
Customers paying beyond the discount period ????
Accounts receivable written off as worthless 22,000
Credit memoranda for sales returns 12,000
An aging of the accounts receivable and estimate of uncollectible accounts at December 31, 2021 revealed the following:
Age Amount Probability of Uncollectibility
Less than 30 days 150,000 2%
31-90 days 120,000 8%
91-120 days 86,000 15%
More than 120 days balance 30%
How much is the bad debts expense for the year 2021?
a. 41,300
b. 25,300
c. 33,300
d. 31,300
Question 5
Maps Inc. prepared an aging of its accounts receivable at December 31, 2020 and determined that the amortized
carrying amount of the receivables was P250,000. Additional information is available as follows:
Allowance for bad debts at 1/1/2020-credit balance 28,000
Accounts written off as uncollectible during 2020 23,000
Accounts receivable at 12/31/2020 270,000
Uncollectible accounts recovered during 2020 5,000
For the year ended December 31, 2020, Maps' bad debts expense would be?
10,000
Question 6
A Company had the following information for 2022 relating to its accounts receivable:
Accounts receivable, January 1 1,300,000
Credit sales 5,400,000
Collections from customers, excluding recovery 4,750,000
Accounts written off 125,000
Collection of accounts written off in prior year
(customer credit was not re-established) 25,000
Estimated uncollectible receivables per aging
At December 31 165,000
What is the balance of accounts receivable, before allowance for doubtful accpunts, on 12/31/2022?
1,825,000
Question 7
A Company had the following information for 2022 relating to its accounts receivable:
Accounts receivable, January 1 1,300,000
Credit sales 5,400,000
Collections from customers, excluding recovery 4,750,000
Accounts written off 125,000
Collection of accounts written off in prior year
(customer credit was not re-established) 25,000
Estimated uncollectible receivables per aging
At December 31 165,000
What is the balance of accounts receivable, after allowance for doubtful accounts, on 12/31/2022?
Question 8
At the end of its first year of operations, December 31, 2022, B Company had accounts receivable of P6,000,000, net of
the related allowance for doubtful accounts. During 2022, B Company recorded charges to bad debts expense of
P900,000 and wrote off P200,000 of uncollectible accounts receivable.
On December 31, 2022, how much should B Company report as accounts receivable before the allowance for doubtful
accounts?
6,700,000
Question 9
On January 1, 2022, C Company’ s allowance for doubtful accounts had a credit balance of P300,000. During 2022, C
Company charged P650,000 to doubtful accounts expense, wrote off P450,000 of uncollectible accounts receivable, and
unexpectedly recovered P100,000 of bad debts written off in the prior year.
What is the allowance for doubtful accounts on December 31, 2022?
600,000
Question 10
D Company prepared an aging of its accounts receivable at December 31, 2022, and determined that the net realizable
value of the accounts receivable was P2,500,000. Additional information is available as follows:
Allowance for uncollectible accounts, Jan 1 280,000
Accounts written off as uncollectible 230,000
Accounts receivable at Dec 31 2,700,000
Uncollectible accounts recovery 50,000
For the year ended December 31, 2022, what is the uncollectible accounts expense?
100,000
Question 11
E Company’s allowance for doubtful accounts was P200,000 at the end of 2022 and P180,000 at the end of 2021. For the
year ended December 31, 2022, E Company reported doubtful accounts expense of P50,000.
What amount did E Company debit to the appropriate amount in 2022 to write off actual debts?
Question 12
The following information pertains to F Company’s accounts receivable at December 31, 2022.
Days outstanding Estimated Amt. %uncollectible
0-60 days 1,200,000 1%
60-120 days 900,000 2%
Over 120 days 1,000,000 6%
During 2022, F Company wrote off P70,000 in accounts receivable and recovered P20,000 that had been written off in
prior years. The December 31, 2021 allowance for uncollectible accounts was P60,000.
Under the aging method, what amount of uncollectible accounts expense should F Company report for 2022?
Question 13
The following accounts were abstracted from G Company unadjusted trial balance on December 31, 2022.
Accounts receivable P3,000,000
Allowance for doubtful accts. 10,000
Net credit sales 8,000,000
G Company estimated that 3% of the gross accounts receivable will become uncollectible.
What should be the doubtful accounts expense for 2022?
Question 14
Accounts receivable usually appear in the balance sheet
a. Only if the balance sheet method of estimating uncollectible accounts is used
b. As either current assets or noncurrent assets, depending on whether the allowance method or the direct write
off method is used to account for uncollectible accounts.
c. As current assets, combined with cash and cash equivalents
d. As currents assets, immediately after cash and cash equivalents
Question 15
Accounts receivable are classified as current assets
a. Only if the allowance method is used to estimate the uncollectible accounts
b. Only if convertible into cash beyond one year
c. Whenever accounts receivable arise from “normal” sales to customers, regardless of the credit terms
d. Only if convertible into cash within 60 days or sooner
Question 16
When individual customer’s accounts have credit balances of material amounts, there amounts
a. Must be reported separately in the liability section of the balance sheet
b. Should be omitted from the balance sheet
c. May be deducted from the debit balance other customers accounts in the asset section.
d. May be shown as “credit balances of customers accounts” in the current assets section
Question 17
ABC Cycle Shop sells bicycle to XYZ, a customer who uses Express Charge ( a national credit card, but not issued by a
bank) in recording this sale, ABC Cycle Shop should record
a. A small increase in the allowance for doubtful accounts
b. An account receivable from XYZ
c. An account receivable from Express Charge
d. A cash receipt
Question 18
If a company employs the gross method of recording receivables from customers, then sales discounts taken should be
reported as
a. Sales discount forfeited in the cost of sales section of the income statement
b. An item of other expense in the income statement
c. A deduction from accounts receivable in determining the net realizable value
d. A deduction from sales in the income statement
Question 19
Which of the following is an advantage of using the net price method for recording cash discounts on credit sales?
a. It properly reflects current periods sales revenue
b. It simplifies recording of sales returns and allowances
c. It eases communication with customers about their balances
d. It requires less record-keeping efforts than the gross method
Question 20
Which of the following accounting principles primarily supports use of allowance for doubtful accounts?
a. Full-disclosure principle
b. Continuity principle
c. Cost principle
d. Matching principle
Question 21
The allowance method of recognizing bad debt expense is generally considered a generally accepted accounting
principle. What two conditions must be met before the allowance method can be used?
a. Bad debts must be expected and material
b. Bad debts must be persistent over time and the method used to estimate them is consistently applied
c. Bad debts must be probable and measurable
d. Bad debts must be relevant and reliable
Question 22
Which of the following methods may not be appropriate for estimating bad debt expense?
a. Aging of accounts receivable
b. Percentage of outstanding accounts receivable
c. Individual or collective assessment of outstanding receivables
d. Percentage of income
Question 23
When the allowance method is used, the entry which is appropriate when a particular account is written off as
uncollectible should include a
a. Credit to sales revenue
b. Credit to bad debt expense
c. Debit to allowance for doubtful accounts
d. Debit to accounts receivable
Question 24
ABC Company uses the allowance method in recognizing uncollectible accounts. Ignoring deferred taxes, the entity to
record the write-off of a specific uncollectible account
a. Affects neither net income now working capital
b. Decreases both net income and working capital
c. Decreases both net income and accounts receivable
d. Affects neither net income nor accounts receivable
Question 25
A company, which has an adequate amount in its Allowance for Doubtful Accounts, writes off as uncollectible an
accounts receivable from a bankrupt customer. This action will
a. Reduce total current assets
b. Reduce net income for the period
c. Reduce the amount of equity
d. Have no effect on total current assets
Question 26
Which is generally accepted method of determining the amount of the adjustment to bad debt expense?
a. A percentage of sales adjusted for the balance in allowance
b. An amount derived from aging accounts receivable adjusted for the balance in allowance
c. A percentage of accounts receivable not adjusted for the balance in allowance
d. An amount derived from aging accounts receivable not adjusted for the balance in allowance
Question 27
All of the following are characteristics of financial assets classified as loan and receivable except
a. The holder has demonstrated positive intention and ability to hold them to maturity
b. The holder can recover substantially all of its investment (unless there has been credit deterioration)
c. They are not quoted in an active market
d. They have fixed or determinable payments