ow much uncollectible accounts expense should be presented on the statement of comprehensive income for the year ended December 31, 2018?  160,600 194,000 240,600 254,600

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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How much uncollectible accounts expense should be presented on the statement of comprehensive income for the year ended December 31, 2018? 

160,600

194,000

240,600

254,600

KING KONG Company's balance in the Allowance for Uncollectible accounts was P154,000 at January
1, 2018. During 2018, credit sales totaled P9,000,000, interim provisions for uncollectible accounts
were made at 2% of credit sales, P95,000 of bad debts were written-off, and recoveries of accounts
previously written off amounted to P95,000. KING KONG installed a computer facility in November
2018 and an aging of accounts receivable was prepared for the first time as of December 31, 2018. A
summary of the aging is as follows:
Estimated
Percentage
Uncollectible
Classification by
Month of Sale
Nov. Dec. 2018
Jul. - Oct. 2018
Balance in
Each
Category
P1,080,000
650,000
420,000
150,000
2%
10%
Jan. – Jun. 2018
25%
Prior to Jan. 1, 2018
70%
Based on the review of collectability of the account balances in the "prior to January 1, 2018" aging
category, additional receivables totaling P60,000 were written-off as of December 31, 2018. The 70%
uncollectible estimate applies to the remaining P90,000 in the category. Effective with the year ended
December 31, 2018, KING KONG adopted a new accounting method for estimating the allowance for
uncollectible accounts at the amount indicated by the year-end aging analysis of the accounts
receivable.
Transcribed Image Text:KING KONG Company's balance in the Allowance for Uncollectible accounts was P154,000 at January 1, 2018. During 2018, credit sales totaled P9,000,000, interim provisions for uncollectible accounts were made at 2% of credit sales, P95,000 of bad debts were written-off, and recoveries of accounts previously written off amounted to P95,000. KING KONG installed a computer facility in November 2018 and an aging of accounts receivable was prepared for the first time as of December 31, 2018. A summary of the aging is as follows: Estimated Percentage Uncollectible Classification by Month of Sale Nov. Dec. 2018 Jul. - Oct. 2018 Balance in Each Category P1,080,000 650,000 420,000 150,000 2% 10% Jan. – Jun. 2018 25% Prior to Jan. 1, 2018 70% Based on the review of collectability of the account balances in the "prior to January 1, 2018" aging category, additional receivables totaling P60,000 were written-off as of December 31, 2018. The 70% uncollectible estimate applies to the remaining P90,000 in the category. Effective with the year ended December 31, 2018, KING KONG adopted a new accounting method for estimating the allowance for uncollectible accounts at the amount indicated by the year-end aging analysis of the accounts receivable.
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