Problem 5-5 Problem 5-6 (PHILCPA Adopted ) At the beginning of current year, Nostalgia Company reported the At the beginning of current year, Rampant Company reported following information: that the allowance for doubtful accounts has = credit balance of P170,000. Accounts receivable 1,500,000 Allowance for doubtful accounts 60,000 Bad debt recoveries and bad debts written off in the current The following summary transactions affecting accounts receivable year went P30,000 and P235,000, respectively. occurred during the current year: Sales - all on account 2/10, 1/15, n/ 60 7.935,000 The allowance account had been previously calculated as : Cash received from customers 8,000,000 percentage of net sales- The cash received from customers included the following: It was decided however to provide for doubtful accounts Customers paying within commencing with the Year-end adjusting entry on the basis the 10-day discount period 4,410,000 of an analysis of the age of the receivables Customers paying within the 15-day discount period 2,475,000 The following schedule was prepared. Percent Recovery of accounts written off 15,000 uncollectible Customers paying beyond the discount period Not yet due 1,700,000 NIL 1-30 days past due 1,200,000 5 Accounts receivable written off as worthless 55, 000 31-60 days past due 100,000 25 Credit memoranda for sales return 30, 000 61-90 days past due 150,000 50 Over 90 days past due 120,000 100 Required: Additional accounts to be written off 30,000 a. Prepare journal entries to record the transactions. b. Prepare the adjustment for doubtful accounts if the entity Required: follows the percentage of accounts receivable consistently. 1. What is the required allowance for doubtful accounts at year- c. Determine the net realizable value of accounts receivable at end? year-end? 2. How much would be the doubtful accounts expense for the current year? 3. What is the adjusting entry for the doubtful accounts expense for the current year? Problem 6-3 Notes Receivable 4. What is the net realizable value of accounts receivable at year-end ? Innovative Company manufactures and sells electrical generators. On January 1, 2019, the entity sold an electrical generator costing P700,000 for P1,000,000. The buyer paid P100.000 down and signed : P900,000 noninterest bearing note payable in the three equal installments every December 31. The prevailing interest rate for : note of this type is 12%. The present value of an ordinary annuity of 1 for three periods is 2.4018 . Required: Prepare journal entries for the current year