Questions: a. What is the correct bad debt expense for the year assuming that the allowance for doubtful accounts had a balance of P120,500 as of January 1, 2022? b. Your proposed adjusting journal entry to correct the balance of allowance for bad debts would include a net debit or credit of? (just indicate the amount)
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.
Questions:
a. What is the correct bad debt expense for the year assuming that the allowance for doubtful accounts had a balance of P120,500 as of January 1, 2022?
b. Your proposed
include a net debit or credit of? (just indicate the amount)
![The client's accountant also provided you the following aging of accounts receivable, along with
the company's policy of providing allowance for doubtful accounts:
Age
Current (60 days)
1-60 days past due
61-120 days past due
More than 120 days past due
Amount
P1,650,000
1,100,000
750,000
500,000
% Uncollectible
6%
12%
24%
The company has recorded bad debt expense of P75,000 for the year. During the year, however,
it had a P25,000 recovery of a previously written-off account and a P135,000 write-off of
uncollectible accounts (see reconciliation above).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38825fa7-25d1-4d00-abae-09f1b37e3439%2Fef3a982c-505c-4cbd-8256-fa46969be968%2F6c2u7k_processed.jpeg&w=3840&q=75)
![In line with your audit of Charlie Marupok Corporation receivable balances as of December 31,
2022, the client's accountant provided you the following SL to GL reconciliation:
Balance per Subsidiary Ledger
1. Charge for consignment sales, goods delivered on (200,000)
December 5, 2022. Consignee's response to inquiry
indicated that the goods are still unsold.
2. Charge for deliveries on December 29, goods still in-
transit under FOB Shipping point term
3. Charge for deliveries on December 30, goods still in-
transit under FOB Destination term
5. Subscriptions receivable from shareholders due March
2, 2024 (dated March 2, 2022)
6. Deposits on long-term contracts (dated September 10,
2022)
4. Charge for goods delivered on January 2, 2023 in (20,000)
transit as of December 31, 2022, under FOB destination
terms.
7. Credit balance in customer accounts
P4,000,000
8. Credit memos for merchandise returns for invoice
originally dated October 10
50,000
Balance per General Ledger
(60,000)
120,000
400,000
(90,000)
(12,000)
9. Portion of a November 15 outstanding invoice to a
customer, returned by the customer on December 31,
2022.
10. Cash advances to an affiliated company
11. Write-off of a receivable from customer who recently (135,000)
declared bankruptcy. Outstanding invoices were dated
April 5 (P60,000), and July 20, 2022 (P75,000)
(100,000)
350,000
P4,303,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38825fa7-25d1-4d00-abae-09f1b37e3439%2Fef3a982c-505c-4cbd-8256-fa46969be968%2Fr08vci5_processed.jpeg&w=3840&q=75)
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