Name: Jewele Grace M.
Velado
Course & Year: BSA-1C
Subject: Conceptual Framework & Accounting Standard
Assignment: Accounts Receivable
Problem 4-2 (IAA)
Credible Company provided the following T-account summarizing the transactions
affecting the accounts receivable for the current year:
Accounts Receivable
Jan. 1 Balance 600,000 Collections from Customer 5,300,000
Charge Sales 6,000,000 Writeoff 35,000
Shareholder’s Subscriptions 200,000 Merchandise Returns 40,000
Deposit on Contract Allowances to customer for
120,000 25,000
shipping damages
Claims against common Collections on Carrier Claims
100,000 40,000
carrier for damages
IOUs from employees 10,000 Collection on Subscriptions 50,000
Cash advance to affiliates 100,000
Advances to a supplier 50,000
Required:
a) Compute the correct amount pf accounts receivable.
Accounting Receivable, Beg. Balance P600,000
Charge Sales 6,000,000
Collections from Customers (5,300,000)
Writeoff (35,000)
Merchandise Returns (40,000)
Allowances to customer for shipping damages (25,000)
Accounts Receivable, End P1,200,000
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b) Prepare one compound entry to adjust the accounts receivable.
Subscription Receivable 150,000
Deposit on Contract 120,000
Claims Receivable 60,000
IOUs from Employees 10,000
Advances to Affiliates 100,000
Advances to Suppliers 50,000
Accounts Receivable 490,000
c) Compute the amount to be presented as “trade and other receivables” under
current assets.
Accounts Receivable P1,200,000
Claims Receivable 60,000
Advances to Employees 10,000
Advances to Suppliers 50,000
Trade and Other Receivables P1,320,000
d) Indicate the classification and presentation of the other items.
Subscription Receivable should be deducted from subscribed share capital.
Deposit on Contract should be presented as noncurrent asset.
Advances to Affiliates should be classified as noncurrent and presents as long-
term investment.
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Problem 4-3 (ACP)
Affectionate Company sold merchandise on account for P500,000. The terms are 3/10,
n/30. The related freight charge amounted to P10,000. The account was collected within
the discount period.
Required:
Prepare journal entries to record the transactions under the following freight terms:
a) FOB Destination and Freight Collect
Upon Sale:
Accounts Receivable 500,000
Freight Out 10,000
Sales 500,000
Allowance for Freight Charge 10,000
Upon Payment:
Cash 475,000
Sales Discount 15,000
Allowance For Freight Charge 10,000
Accounts Receivable 500,000
b) FOB Destination and Freight Prepaid
Upon Sale:
Accounts Receivable 500,000
Freight Out 10,000
Sales 500,000
Cash 10,000
Upon Payment:
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Cash 485,000
Sales Discount 15,000
Accounts Receivable 500,000
c) FOB Shipping Point and Freight Collect
Upon Sale:
Accounts Receivable 500,000
Sales 500,000
Upon Payment:
Cash 485,000
Sales Discount 15,000
Accounts Receivable 500,000
d) FOB Shipping Point and Freight Prepaid
Upon Sale:
Accounts Receivable 510,000
Sales 500,000
Cash 10,000
Upon Payment:
Cash 495,000
Sales Discount 15,000
Accounts Receivable 510,000
Problem 4-4 (ACP)
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Fiancee Company records sales return during the year as a credit to accounts
receivable.
However, at the end of the accounting period, the entity estimates the probable sales
return and records the same by means of an allowance account.
The following transactions occurred in summary form:
1. Sale of merchandise on account, 2/10, n/30 4,000,000
2. Collection within the discount period 1,470,000
3. Collection beyond the discount period 1,000,000
4. Sales Return Granted 100,000
5. Sales Return estimated at the end of the year 20,000
Required:
Prepare journal entries to record the transactions.
1. Accounts Receivable 4,000,000
Sales 4,000,000
2. Cash 1,470,000
Sales Discount 30,000
Accounts Receivable 1,500,000
3. Cash 1,000,000
Accounts Receivable 1,000,000
4. Sales Return 100,000
Accounts Receivable 100,000
5. Sales Return 20,000
Allowance for Sales Return 20,000
Problem 4-5 (IAA)
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On June 15,2020 Romela Company sold 100 air conditioning units. The sale price for
each unit is P45,000.
All of sales are subject to terms 2/10, n/30. The entity used the gross method of
accounting for accounts receivable.
Required:
1. Prepare journal entry to record the sale.
Accounts Receivable 4,500,000
Sales 4,500,000
2. Prepare journal entry to record receipt of the payment assuming the correct amount
was received on June 25,2020.
Cash 4,410,000
Sales Discount 90,000
Accounts Receivable 4,500,000
3. Prepare the journal entry to record receipt of the payment assuming the correct
amount was received on July 10,2020.
Cash 4,500,000
Accounts Receivable 4,500,000
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