Chapter 2 - Re les MC17 MC18 MC19 MC20 ‘A 120-day, 6% interest-bearing note pal oe coe Bw bani at 8% after being held for 45 OT be the . feceived from the bank upon discounting secount at 8% for 120 days. the discov at 8% for 45 days. int at 8% for 75 days. 6% for 75 days. maturity value less maturity value less the di maturity value less the discou maturity value less the discount at n a note receivable is discounted Boop The account credited whe: with recourse is Liability on discounted notes. Notes receivable. Accounts receivable. Allowance for discounted notes. poop The following data are given for Mazda, Inc.: Cash Credit Cost of sales P50,000 P450,000 Cash received from customers 65,000 585,000 650,000 Assuming merchandise was marked to sell as follows: Cash sales, at 30% above cost and credit sales, at 40% above cost, all of which are collectible. The balance of accounts receivable at the end of the period was a P12,500 b. P45,000 c. P135,000 d P147,500 Expedition Company sold merchandise on credit with a list price of P105,000 and a trade discount of 10%. Terms were 2/10, n/30. Which of the following entries is correct, given the indicated method of accounting for cash discounts? a. Gross Price Method Accounts Receivable 105,000 Sales, 105,000 b. Gross Price Method Accounts Receivable 92,610 Sales y 92,610 146MC21 MC22 Chapter 2 ~ Receivables e Net Price Method Accounts Receivable 94,500 les . 94,500 d. Net Price Method Accounts Receivable 92,610 Sales 92,610 (Phil. CPA'Adapted) Outlander Company sold on credit merchandise having a list Price of P200,000 with the following terms: trade discount of 10% and 5%; cash discount of 3% if the account is paid within Ww Gays from the invoice date; full amount is due ia 30 days. Which of the following entries is correct, to record the collection of the account, given the indicated method of accounting for cash discounts? a Gross Price Method h Cas! 165,870 Accounts Receivable 165,870 b. Net Price Method Cash 165,870 Sales Discounts 5,130 Accounts Receivable 171,000 e Net Price Method Cash 171,000 Sales Discounts Forfeited 5,130 Accounts Receivable 165,870 d. Gross Price Method Cash 194,000 Sales Discounts oe ena ivabl , Accounts Receivable a eae Civic Company had the following information relating to its accounts receivable: Accounts Receivable at 12/31/21 1,800,000 Credit sales for 2022 400, Collections from customers during 2022 a (including recovery of P25,000) y7e0.000 Accounts written off on 9/30/22 See Collection of accounts written off in prior years Estimated uncollectible receivables per aging at 68 000 12/31/22 147Chapter 2 - Recetvables MC23 MC24 MC25, tg mecOUnss TeCEiug, Lis palit Gl ny’ accoury ‘ab ly At December 31, 2022, Civic Coneounts should be before allowance for uncollect a, 1,825,000 b. P1,850,000 ce. P1,950,000 d. P1,990,000 fi ing, 10 Sey You obtained the following Information relating 10 Sentry i, compan Trading, a general merchandiviny 20%, Rate of gross profit on sales : . Accounts Receivable, December 31, 202 a ¥ Bo'o00 Collections on accounts receivable in 202: ‘4600 Cost of goods available for sale in 2022 460,000 Merchandise Inventory, December 31, 2022 ,000 ‘on account, what was the company's Assuming all sales we Accounts Receivable balance on December 31, 2022? a. P120,000 b. P100,000 Cy P90,000 d. PSO,000 Accounts Receivable for Tamaraw Company at December 31, 2022 showed a balance of P1,500,000. The Allowance for Expected Credit Loss had a P45,000 debit balance before the year-end adjustment. Sales. during the year totaled P12,500,000, An aging analysis shows that P75,000 of the outstanding accounts receivable are estimated to be uncollectible. How much is the Impairment Loss (Bad Debts Expense) for 2022? a. P30,000 b. P45,000 c. P75,000 d. P120,000 You obtained the following accounts from anys unadjusted trial balance on December 31, 3003, ae i : Accounts Receivable 1000000 Allowance for Bad Debts : * 81000 Net credit sales : 3,000,000 148MC26 MC27 MC28 Lancer estimates that 3% of the gross accounts receivable outstanding will become uncollectible. After adjustment on December 31; 2022, what is the balance of the allowance for bad debts? a P90,000 b. P82,000 ©. —_-P38,000 a P30,000 Use the same information given in MC25. How much bad debts expense is reported in Lancer's Statement of Comprehensive Income for year ended December 31, 2022? a. P90,000 b. —_-P82,000 c. _ P38,000 d. —_ P30,000 (AICPA Adapted) Corolla, Inc. prepared an aging of its accounts receivable at December 31, 2022 and determined that the amortized cost of the receivables was P250,000. Additional information is available as follows: Allowance for Bad Debts, 1/1/22 - credit balance P28,000 Accounts written off as uncollectible during 2022 23,000 Accounts Receivable at 12/31/22 270,000 Uncollectible accounts recovery during 2022 5,000, What is Corolla, Inc.’s bad debts expense for the year 2022? a P23,000 b. _ P20,000 c. _ P15,000 d. 10,000 Vanette Company recorded Impairment Loss on its receivable of P20,000 during 2022. The allowance for expected credit loss had a balance of P17,500 on December 31, 2021. During the year 2022, Vanette wrote off P30,500 of uncollectible receivables and recovered P8,050 of accounts written off in prior years. 149Chapter 2 - Receivables How much will be the allowance for expected credit loss a December 31, 2022? P7,000 a. b. P15,050 c. P19,050 d. - P45,550 MC29 Galant Company has the following data relating to accounts receivable for the year ended December 31, 2022: P 480,000 Accounts Receivable, January 1, 2022 19,200 Allowance for Bad Debts, January 1, 2022 Sales during the year, all on account, terms: 2/10, 1/15, n/30 2,400,000 Cash received from customers during the year 2,560,000 Accounts written off during the year 17,600 An analysis of cash received from customers during the year revealed that P1,411,200 was received from customers availing the 10-day discount period, P792,000 from customers availing the 15-day discount period, P4,800 represented recovery of accounts written off, and the balance was received from customers paying beyond the discount period. Galant’s year-end balance of allowance for bad debts was estimated to be 5% of the outstanding accounts receivable’ as at December 31, 2022, based on the aging of the accounts. What is the accounts receivable balance at December 31, 2022? a. P307,200 b. . P270,400 c. P289,600 d. 265,600 MC30 Use the same information given in MC29. How much was Galant’s bad debts expense for the year ended December 31, 20222 a. P7,120 b.. P8,080 c. P8960 d.— P11,920 (Phil. CPA Adapted) 150meal MC32 MC33, _Chapter 2 - Recetvables On March 31, 2022, Legend Company had an unadjusted credit balance of P10,000 in its allowance for expected credit loss. An analysis of Legend's trade accounts receivable at that date revealed the following: Age Amount Estimated Uncollectible 0-30 days P600,000 5% 31-60 days 40,000 10% Over 60 days 20,000 P14,000 What amount should Legend report as allowance for expected credit loss in its March 31, 2022 statement of financial position? a. P48,000 b. P40,000 c P38,000 d. —_ P30,000 During 2022, the CRV Company wrote off uncollectible accounts of P7,500 and recovered accounts of P3,700 that had been written off in 2021. In addition, the following information is available: Accounts Receivable Amortized Cost December 31, 2021 P375,000 P362,500 December 31, 2022 500,000 480,000 The uncollectible accounts expense for the year 2022 is a. P 8,700 b. P11,300 c P16,200 a. 20,000 On December 31, 2022, Pajero Corporation sold equipment to Safari Company for P100,000. Pajero accepted a 10% note receivable for the entire sales price. This note is payable in two equal installments of P50,000 plus accrued interest on December 31, 2023 and December 31, 2024. On July 1, 2024, Pajero discounted the note at a bank at a discount rate of 12%. Pajero Corporation’s proceeds from the discounted note were a. P48,400 b. P49,350 c. PS0,350 d. P51,700 (AICPA Adapted) 151Shapter 2- Receivables my MC34 On January 1, 2022, Audi Corporation sold equipment Costing P380,000 and with accumulated depreciation of P160,000, t Teceived as consideration for the sale, a P400,000 non-interest" bearing note, due January 1, 2025. There was no establishe © exchange price for the equipment and the note had no Teady MC35, MC36 market. The prevailing rate of interest for a note of this type ,) January 1, 2022 was 10%. The present value of 1 at 10% 4, three periods is 0.75. In Audi’s 2022 statement of comprehensive income, how much should be reported as interest income? a, P140,000 b. * 33,000 c. P30,000 a P13,500 Use the same information given in MC34. What is the carryi amount of the note at Audi's December 31, 2022 statement of financial position? a. P270,000 b. P300,000 c P330,000 d. P400,000 On December 1, 2022, the State Finance Company gave Conanan Company a P2,000,000, 12% loan. Conanan Company received proceeds of P1,940,000, after deduction of non- refundable finance and other processing charges of P60,000. Principal and interest are due in 60 monthly installments of 44,500 beginning January 1, 2023. The repayment yields an effective interest rate of 13.4% based on the proceeds of P1,940,000. State Finance Company has the intention of collecting the contractual cash flows from this loan over the full term of the loan, thus, does not elect to measure this at fair value. What amount of interest revenue should State Finance Company recognize for the year 2022 as a result of this loan? a PO. b. P20,000 c. P21,663 d. P22,333 152MC37 MC38 MC39 MC40 Mc41 Chapter 2 - Recewables Use the same information given in MC36. How much Interest Receivable should State Finance record on December 31, 20232 a PO b. —_ P20,000 c P21,663 d. P22:333 (AICPA Adapted) What amount Telating to the notes receivable should Jack classify as current assets on December 31, 2023? a. P594,500 b. P659,895 ¢, P781,198 d. P902,500 Use the same information given in MC38, How much is interest income for the year ended December 31, 2023? P121,303 P154,000 P275,303 P308,000 Boop Starrex Company received from a customer a one-year, P500,000 note bearing annual interest of 8%. After holding the note for four months, Starrex discounted the note, with recourse, at Asian Bank at a discount rate of 10%. At the date of discounting, Starrex would receive cash of a. PS0,000 b. P504,000 ® P522,000 da.’ P540,000 Carnival Company found itself in financial difficulties and decided to use its accounts receivable as a means of ae cash to continue operations. On July 1, 2022, Carnival fact 153Chapter 2 - Receivables i | eds of | P750,000 of accounts receivable for cae rane ‘accounts 0. No bad debt allowance was associated wi 2 On December 17, 2022, Carnival assigned oe ae! of accounts receivable, P2,500,000 as of that Hale, Oe Covstera a P1,250,000, 12% annual interest rate 2% finance qmont Company. Carnival received P1,250,000 less © charge ity Additional information is as follows: Allowance for Bad Debts, 12/31/22 (unadjusted) - P 32,099 Accounts Receivable (not including factored an : assigned accounts), December 31, 2022 - 'P500,009 Estimated uncollectibles, 12/31/22 - 3% of Accounts Receivabje Of the assigned accounts, P300,000 had been collected by the end of the year. How much were the proceeds from factoring and genera assignment of the accounts receivable? a. P3,145,000 b. P1,920,000 c. P1,895,000 d. P1,225,000 MC42_ Use the same information given in MC 41. Assuming that these are the only transactions affecting receivables, how much is the bad debts expense for the year ended December 31, 2022? a. P90,000 b. P81,000 c. P58,000 d. P49,000 MC43 On January 2, 2022, Global Finance, Inc. extended a 3-yea, P500,000 loan to G Company. Interest on the loan is 7% payable annually every December 31. ° The first interest payment was made by G Company on December 31, 202% however, the credit information obtained by Global Finance, Inc for.G Company as of December 31, 2022, indicated a probability of default for the next 12 months at 5% and Global expected collect only 90% of the principal loan, On December 31, 2023, P35,000 interest was received by Glob! Finance, Inc. from G Company. On this date the probability ° default over the remaining two years of the loan increased ? 10% and the expected rgcovery of the principal amount * 154