Your audit disclosed that on December 31, 2021, the accounts receivable control account of Eileen Company had a balance of P 2,865,000. An analysis of the accounts receivable account showed the following: Accounts known to be worthless P 37,500 Advance payments to creditors on purchase orders 150,000 Advances to affiliated companies 375,000 Customer’s accounts reporting credit balances arising from sales return (225,000) Interest receivable on bonds 150,000 Other trade accounts receivable -unassigned 750,000 Trade accounts receivable – assigned ( Eileen Company’s equity in assigned accounts is P 150,000) 375,000 Subscription receivables due in 30 days 825,000 Trade installment receivable due 1-18 months including unearned finance charges of P 30,000 330,000 Trade receivables from officers due currently 22,500 Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) 75,000 Total P 2,865,000 1. The trade accounts receivable balance as at December 31, 2021 is A. P 1,522,500 B. P 1,147,500 C. P 1,485,000 D. p 1,447,500 2. The net current trade and other receivables as at December 31, 2021 is A. P 1,822,500 B. P 2,272,500 C. P 2,647,500 D. P 2,610,000 3. How much of the foregoing will be presented under noncurrent assets as at December 31, 2021? A. P 0 B. P 375,000 C. P 525,000 D. P 1,200,000
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.
Your audit disclosed that on December 31, 2021, the
|
Accounts known to be worthless |
P 37,500 |
|
Advance payments to creditors on purchase orders |
150,000 |
|
Advances to affiliated companies |
375,000 |
|
Customer’s accounts reporting credit balances arising from sales return |
(225,000) |
|
Interest receivable on bonds |
150,000 |
|
Other trade accounts receivable -unassigned |
750,000 |
|
Trade accounts receivable – assigned ( Eileen Company’s equity in assigned accounts is P 150,000) |
375,000 |
|
Subscription receivables due in 30 days |
825,000
|
|
Trade installment receivable due 1-18 months including unearned finance charges of P 30,000 |
330,000 |
|
Trade receivables from officers due currently |
22,500 |
|
Trade accounts on which post-dated checks are held (no entries were made on receipts of checks) |
75,000 |
|
Total |
P 2,865,000 |
1. The trade accounts receivable balance as at December 31, 2021 is
A. P 1,522,500
B. P 1,147,500
C. P 1,485,000
D. p 1,447,500
2. The net current trade and other receivables as at December 31, 2021 is
A. P 1,822,500
B. P 2,272,500
C. P 2,647,500
D. P 2,610,000
3. How much of the foregoing will be presented under noncurrent assets as at December 31, 2021?
A. P 0
B. P 375,000
C. P 525,000
D. P 1,200,000
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