Gee Lysa Kaye P.
Vilbar BSA – 1A
Problem 5-1 (IAA)
Required:
Prepare adjusting entry to provide for doubtful accounts under each of the following
independent assumptions:
a. Past experience indicates that 75% of all sales are credit sales and that an average
2% of credit sales may prove uncollectible.
Doubtful accounts 75,000
Allowance for doubtful accounts 75,000
b. One percent of gross sales may prove uncollectible.
Doubtful accounts 50,000
Allowance for doubtful accounts 50,000
c. An analysis of the aging of trade receivables indicates that accounts receivable in the
amount of P80,000 may prove uncollectible.
Doubtful accounts 60,000
Allowance for doubtful accounts 60,000
d. The policy is to maintain an allowance for doubtful accounts equal to 10% of the
outstanding accounts receivable.
Doubtful accounts 30,000
Allowance for doubtful accounts 30,000
Problem 5-4 (IAA)
Required:
a. Prepare journal entries to record the transactions.
1. Accounts receivable 2,600,000
Sales 2,600,000
2. Cash 1,000,000
Accounts receivable 1,000,000
3. Cash 1,455,000
Sales discount 45,000
Accounts receivable 1,500,000
4. Allowance for doubtful accounts 20,000
Accounts receivable 20,000
5. Cash 470,000
Sales 470,000
6. Sales returns and allowances 55,000
Accounts receivable 55,000
7. Sales returns and allowances 10,000
Cash 10,000
8. Accounts receivable 5,000
Allowance for doubtful accounts 5,000
Cash 5,000
Accounts receivable 5,000
b. Prepare the adjustment for doubtful accounts if the entity provides for doubtful
accounts equal to 2% of net credit sales.
Doubtful accounts 50,000
Allowance for doubtful accounts 50,000
c. Determine the net realizable value of accounts receivable at year-end.
Accounts receivable 625,000
Allowance for doubtful accounts (60,000)
Net realizable value 565,000
Problem 5-5 (IAA)
Required:
a. Prepare journal entries to record the transactions.
Accounts receivable 7,935,000
Sales 7,935,000
Cash 4,410,000
Sales discount 90,000
Accounts receivable 4,500,000
Cash 2,475,000
Sales discount 25,000
Accounts receivable 2,500,000
Accounts receivable 15,000
Allowance for doubtful accounts 15,000
Cash 15,000
Accounts receivable 15,000
Cash 1,100,000
Accounts receivable 1,100,000
Allowance for doubtful accounts 55,000
Accounts receivable 55,000
Sales returns and allowances 30,000
Accounts receivable 30,000
b. Prepare the adjustment for doubtful accounts if the entity follows the percentage of
accounts receivable consistently.
Doubtful accounts 30,000
Allowance for doubtful accounts 30,000
c. Determine the net realizable value of accounts receivable at year-end.
Accounts receivable 1,250,000
Allowance for doubtful accounts (50,000)
Net realizable value 1,200,000
Problem 5-6 (IAA)
Required:
1. What is the required allowance for doubtful accounts at year-end?
Required allowance 280,000
2. How much would be the doubtful accounts expense for the current year?
Required allowance 280,000
Allowance for doubtful accounts (170,000)
Doubtful accounts 110,000
3. What is the adjusting entry for the doubtful accounts expense for the current year?
Doubtful accounts 110,000
Allowance for doubtful accounts 110,000
4. What is the net realizable value of accounts receivable at year-end?
Accounts receivable, end 3,270,000
Allowance for doubtful accounts, end (280,000)
Net realizable value 2,990,000
