The  accountant  of  Unjust  Inc. presented  to  you  the following details of its subsidiary ledger in relation to your audit  of  the  company's  accounts  receivable  balance  as  of 

December 31,2020:

Customer                     Invoice Date                           Amount

Cheap Inc.                   December 20                 P   550,000

                                      December 1                        1,200,000

                                      October 11                            950,000

                                      August 4                               420,000

Cruddy Co.                  November 20                     2,000,000

                                     September 4                          900,000

                                     August 2                                 500,000

Grubby Inc.                 December 10                       1,750,000

                                     October 4                              600,000

                                     July 5                                      500,000

Paltry Corp.                September 9                        2,600,000

                                     July 10                                  1,250,000

                                     March 5                                  900,000

Nasty co.                    December 1                          (500,000)

Audit notes:

- The company's term is n/60 days.

- The  company's  general  ledger  shows  the  following balances as of December 31, 2020:

                      Accounts Receivable                           P13,650,000

                      Allowance for doubtful accounts          (950,000)

-The  credit  balance  of  the  receivable  resulted  from Nasty  Co.'s  overpayment  of  its  account.  The  same shall  be  settled  by  a  delivery  of  merchandise  the following period.

-You have discovered that Grubby Inc.'s payment of an October  4  invoice  amounting  to  P600,000  was  posted against  Cruddy  Co.'s  account  for  an  invoice  dated December 4, for the same amount.

-Discussions   with   the   credit   department   manager revealed the following appropriate credit policy:

Accounts receivable           Doubtful of collection

        Current                                       2%

  1-60 days past due                         5%

  61-120 days past due                     20%

  More than 120 days past due       50%

QUESTIONS:

1] How much  is the  unreconciled  difference  between  the control account and the subsidiary ledger?

2] What  is  the  correct  accounts  receivable  balance  as  of December 31, 2020?

3] Assuming  that  there  were  no  other  entries  affecting the  allowance  for  bad  debts,  what  is  the  correct  bad debt expense for 2020?

4] What is correct amortized cost of the receivables as of December 31, 2020?

Answer rating: 100% (QA)

1 To compute the unreconciled difference between the control account and the subsidiary ledger we ne... View the full answer