CPA Inc. is an ecommerce company selling techy workspace docks at 10/10, 5/20, n/30 and it provides for uncollectible accounts based on aging of receivables at year-end. The balance of selected accounts taken from the December 31, 2020 statement of financial position are as follows: Accounts Receivable - P10,800,000 Allowance for Bad Debts - P270,000 The following transactions (in summary) affecting accounts receivable occurred during the year ended December 31, 2021: Sales on account Cash received from customers Cash received includes the following: Customers paying within the 10-day discount period Customers paying within the 20-day discount period Recovery of accounts written off Customers paying beyond the discount period Accounts receivable written off as worthless Credit memoranda for sales returns Age Less than 30 days 31-90 days 91-120 days More than 120 days Amount 1,150,000 2,400,000 20,180,000 21,960,000 An aging of the accounts receivables and uncollectible accounts on December 31, 2021 revealed the following: 563,000 Balance 11,700,000 3,800,000 106,000 ? 22,000 512,000 Probability of Non-collection 5% 8% 10% 27% What are the balances of accounts receivable, related allowance account, and bad debts expense on December 31, 2021?
CPA Inc. is an ecommerce company selling techy workspace docks at 10/10, 5/20, n/30 and it provides for uncollectible accounts based on aging of receivables at year-end. The balance of selected accounts taken from the December 31, 2020 statement of financial position are as follows: Accounts Receivable - P10,800,000 Allowance for Bad Debts - P270,000 The following transactions (in summary) affecting accounts receivable occurred during the year ended December 31, 2021: Sales on account Cash received from customers Cash received includes the following: Customers paying within the 10-day discount period Customers paying within the 20-day discount period Recovery of accounts written off Customers paying beyond the discount period Accounts receivable written off as worthless Credit memoranda for sales returns Age Less than 30 days 31-90 days 91-120 days More than 120 days Amount 1,150,000 2,400,000 20,180,000 21,960,000 An aging of the accounts receivables and uncollectible accounts on December 31, 2021 revealed the following: 563,000 Balance 11,700,000 3,800,000 106,000 ? 22,000 512,000 Probability of Non-collection 5% 8% 10% 27% What are the balances of accounts receivable, related allowance account, and bad debts expense on December 31, 2021?
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 6PB: Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable....
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
What are the balances of accounts receivable, related allowance account, and
A. P7,092,000, P1,110,130, and P756,130
B. P9,616,000, P1,653,370, and P756,130
C. P9,616,000, P1,791,610, and P1,437,610
D. P9,104,000, P1,653,370, and P1,299,370
Transcribed Image Text:CPA Inc. is an ecommerce company selling techy workspace docks at 10/10, 5/20, n/30 and it provides
for uncollectible accounts based on aging of receivables at year-end. The balance of selected accounts
taken from the December 31, 2020 statement of financial position are as follows:
Accounts Receivable – P10,800,000
Allowance for Bad Debts – P270,000
The following transactions (in summary) affecting accounts receivable occurred during the year ended
December 31, 2021:
Sales on account
20,180,000
Cash received from customers
21,960,000
Cash received includes the following:
Customers paying within the 10-day discount period
Customers paying within the 20-day discount period
Recovery of accounts written off
Customers paying beyond the discount period
11,700,000
3,800,000
106,000
?
Accounts receivable written off as worthless
22,000
Credit memoranda for sales returns
512,000
An aging of the accounts receivables and uncollectible accounts on December 31, 2021 revealed
the following:
Probability of Non-collection
Age
Less than 30 days
31-90 days
91-120 days
More than 120 days
Amount
1,150,000
2,400,000
5%
8%
563,000
Balance
10%
27%
What are the balances of accounts receivable, related allowance account, and bad debts
expense on December 31, 2021?
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