Among the transactions of Phoebe Inc. for the first two quarters of 2021 were the following: a. Phoebe Inc. recognized a P 100,000 write-down in its inventory during the 1st quarter. Athena Inc. had expected that the write-down will reverse in the 2nd quarter, and in fact, in the 2nd quarter, the recovery exceeded the previous write-down by P 20,000. b. Phoebe Inc. provides warranty for its sales. In the 1" quarter, Phoebe Inc. estimated a 5% warranty obligation on its 1st quarter sales of P 1,000,000. In the 2nd quarter, a change in accounting estimate was made. It estimated that the cost of warranty should be 10% of total sales. The 2nd quarter sales amounted to P 1,200,000. c. Phoebe Inc. has been estimating its bad debts expense at 2% of credit sales. However, in the 2nd quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for bad debts as of June 30, 2021 is computed at P 30,000. The allowance has a balance of P 5,000 at the beginning of the year. Total write-offs during the first six months of 2021 amounted to P 12,000; recoveries totalled P 3,000. Credit sales for the 1 and 2nd quarters amounted to P 1,000,000 and P 2,000,000, respectively.
Among the transactions of Phoebe Inc. for the first two quarters of 2021 were the following: a. Phoebe Inc. recognized a P 100,000 write-down in its inventory during the 1st quarter. Athena Inc. had expected that the write-down will reverse in the 2nd quarter, and in fact, in the 2nd quarter, the recovery exceeded the previous write-down by P 20,000. b. Phoebe Inc. provides warranty for its sales. In the 1" quarter, Phoebe Inc. estimated a 5% warranty obligation on its 1st quarter sales of P 1,000,000. In the 2nd quarter, a change in accounting estimate was made. It estimated that the cost of warranty should be 10% of total sales. The 2nd quarter sales amounted to P 1,200,000. c. Phoebe Inc. has been estimating its bad debts expense at 2% of credit sales. However, in the 2nd quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for bad debts as of June 30, 2021 is computed at P 30,000. The allowance has a balance of P 5,000 at the beginning of the year. Total write-offs during the first six months of 2021 amounted to P 12,000; recoveries totalled P 3,000. Credit sales for the 1 and 2nd quarters amounted to P 1,000,000 and P 2,000,000, respectively.
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