Seatwork 2B.

Apple Company reported the following balances as of December 31, 2020 before any year-end adjustments:

Accounts receivable 5,000,000

Allowance for doubtful accounts 150,000

The aging of accounts receivable as of December 31, 2020 are provided below:

Outstanding Accounts receivable Expected uncollectible

0 days 2,500,000 0%
1 – 30 days 1,500,000 5%
31 – 60 days 400,000 10%
61 – 90 days 300,000 15%
91 – 120 days 200,000 20%
Over 120 days 100,000 25%

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020

Compute for the following:

Percent of Sales Percent of A/R Aging of A/R
Scenario A Scenario B Scenario C
As of December 31, 2020
Allowance for doubtful accounts 1. 4. 7.

Doubtful accounts expense 2. 5. 8.

Accounts receivable – net 3. 6. 9.

Seatwork 2B.2
Score
Items 18

Scenario A. Percent of Sales:

Banana Company reported the following balances as of December 31, 2020 before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000
Sales 15,000,000

The entity estimated that 5% of the sales will be uncollected.

Compute for the following:

1. Allowance for doubtful accounts as of December 31, 2020
2. Doubtful accounts expense on December 31, 2020
3. Carrying amount of the accounts receivable as of December 31, 2020
 Name: _Section: _ LESSON 2B 5
Scenario B. Percent of Accounts Receivable
Banana Company reported the following balances as of December 31, 2020 before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000

The entity estimated that 15% of the Accounts Receivable will be uncollected.

Compute for the following:

4. Allowance for doubtful accounts as of December 31, 2020
5. Doubtful accounts expense on December 31, 2020
6. Carrying amount of the accounts receivable as of December 31, 2020

Scenario C. Aging of Accounts Receivable

Banana Company reported the following balances as of December 31, 2020 before any year-end adjustments:

Accounts receivable 6,000,000

Allowance for doubtful accounts 300,000

The aging of accounts receivable as of December 31, 2020 are provided below:

Outstanding Accounts receivable Probability of collection

Under 15 days 3,000,000 .96
16 – 30 days 2,000,000 .90
31 – 45 days 400,000 .80
46 – 60 days 300,000 .70
61 – 75 days 200,000 .65
Over 75 days 100,000 .00

The accounts which have been outstanding over 75 days and have zero probability of collection.

Compute for the following:

7. Allowance for doubtful accounts as of December 31, 2020
8. Doubtful accounts expense on December 31, 2020
9. Carrying amount of the accounts receivable as of December 31, 2020

Answers:
Percent of Sales Percent of A/R Aging of A/R
Scenario A Scenario B Scenario C
As of December 31, 2019
Allowance for doubtful accounts 1. 4. 7.

Doubtful accounts expense 2. 5. 8.

Accounts receivable – net 3. 6. 9.

Seatwork 2B.3
Score
Items 18

The Allowance for doubtful accounts of Chico Company as of January 1, 2020 amounted to P500,000. During 2020, the company wrote
off P250,000 of its accounts receivable.

1. Compute for the allowance for doubtful accounts as of December 31, 2020, before the year-end adjustment
 Chico Company reported the following balances as of December 31, 2020 before any year-end adjustments:

Accounts receivable 7,500,000

Allowance for doubtful accounts ? (Answer in 1)
Sales 20,000,000

Scenario A. Percent of Sales:

The entity estimated that 5% of the sales will be uncollected.

Compute for the following:

2. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
3. Doubtful accounts expense on December 31, 2020
4. Carrying amount of the accounts receivable as of December 31, 2020

Scenario B. Percent of Accounts Receivable

The entity estimated that 15% of the Accounts Receivable will be uncollected.

Compute for the following:

5. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
6. Doubtful accounts expense on December 31, 2020
7. Carrying amount of the accounts receivable as of December 31, 2020

Scenario C. Aging of Accounts Receivable

The aging of accounts receivable as of December 31, 2020 are provided below:

Outstanding Accounts receivable Probability of collection

Under 15 days 3,600,000 .96
16 – 30 days 2,500,000 .90
31 – 45 days 500,000 .80
46 – 60 days 400,000 .70
61 – 75 days 300,000 .65
Over 75 days 200,000 .00

Compute for the following:

8. Allowance for doubtful accounts as of December 31, 2020 (after the year-end adjustment)
9. Doubtful accounts expense on December 31, 2020
10. Carrying amount of the accounts receivable as of December 31, 2020

Compute for the following:

Percent of Sales Percent of A/R Aging of A/R
Scenario A Scenario B Scenario C
As of December 31, 2020
Allowance for doubtful accounts 1.
(before year-end adjustment
Adjusted Allowance for doubtful 2. 5. 8.
accounts
Doubtful accounts expense 3. 6. 9.

Accounts receivable – net 4. 7. 10.

 Name: _Section: _ LESSON 2B 7
Seatwork 2B.4
Score
Items 2

The following accounts were abstracted from Namesake Company’s unadjusted trial balance on December 31, 2020:

Debit Credit
Accounts receivable 3,000,000
Allowance for doubtful accounts 10,000
Net credit sales 8,000,000

The entity estimated that 3% of the gross accounts receivable will be uncollectible. What amount should be reported as doubtful accounts
expense for 2020?
a. 240,000 c. 90,000
b. 100,000 d. 80,000

Seatwork 2B.5
Score
Items 2

Bestial Company’s trial balance on December 31, 2020 included the following accounts:

Debit Credit
Allowance for doubtful accounts 5,000
Sales 7,200,000
Sales return 200,000

The entity estimated uncollectible accounts receivable at 2% of net sales. What is the amount of doubtful accounts expense that should
be reported for 2020?
a. 140,000 c. 135,000
b. 145,000 d. 144,000

Seatwork 2B.6
Score
Items 2

Tantrum Company provided the following information in relation to accounts receivable at year-end:

Days Outstanding Estimated Amount % Uncollectible

0 – 60 1,200,000 1%
61 – 120 900,000 2%
Over 120 1,000,000 6%
3,100,000

During the current year, the entity wrote of P50,000 in accounts receivable.

At the beginning of current year, the allowance for uncollectible accounts was P60,000.

Under the aging method, what amount of uncollectible accounts expense should be reported for the current year?
a. 90,000 c. 70,000
b. 80,000 d. 60,000
 Name: _Section: _ LESSON 2B 8
Seatwork 2B.7
Score
Items 2

Flappable Company began operations on January 1, 2017. The entity provided for doubtful accounts based on 5%of the annual credit
sales in prior years. On January 1, 2020, the entity changed the method of determining the allowance for doubtful accounts using the
aging schedule.

2020 2019 2018 2017

Credit sales 15,000,000 9,500,000 8,000,000 6,000,000
Collections excluding recovery 11,700,000 8,200,000 6,700,000 4,500,000
Accounts written off during year 200,000 120,000 80,000 None
Recovery of accounts written off 100,000 40,000 35,000 None

Days Account Outstanding Amount Probability of collection

30 days or less 3,000,000 95%
Between 31 and 60 days 1,500,000 80%
Between 61 and 180 days 1,200,000 75%
Between 181 and one year 1,200,000 50%
Over one year – to be written off 100,000 0%

1. What amount should be reported as allowance for doubtful accounts on December 31, 2020?

a. 1,350,000 c. 1,250,000
b. 1,450,000 d. 1,000,000

2. What amount should be reported as doubtful accounts expense for the current year?

a. 500,000 c. 700,000
b. 600,000 d. 400,000

3. What is the net realizable value of accounts receivable on December 31, 2020?

a. 6,900,000 c. 5,550,000
b. 7,000,000 d. 5,650,000