Professional Company produces paints and related products for sale to the construction industry throughout Metro Manila....

 

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Professional Company produces paints and related products for sale to the construction industry throughout Metro Manila. While sales have remained relatively stable despite a decline in the amount of new construction. there has been a noticeable change in the timeliness with which the company's customers are paying their bills. The company sells its products on payment terms of 2/10, n/30. In the past. over 75 percent of the credit customers have taken advantage of the discount by paying within 10 days of the invoice date. During the year ended December 31, 2015, the number of customers taking the full 30 days. to pay has increased. Current indications are that less than 60% of the are now taking the discount. Uncollectible accounts as a customers percentage of total credit sales have risen from the 1.5 % provided in the past years to 4 % in the current year. In response to your accounts receivable following report: request for more information on the deterioration of collections, the company's controller has prepared the 64% 18% 8% 5% 3% 236 Professional Company Accounts Receivable Collections December 31, 2015 is normal and The fact that some credit accounts will prove uncollectible annual bad debt write-offs had been 1.5 % of total credit sales for many years. However, during the year 2015, this percentage increased to 4%. The accounts receivable balance is P1,500,000 and the condition of this balance in terms of age and probability of collection is shown below Proportion to total Age of accounts 1-10 days 11-30 days Past due 31- 60 days Fast due. 61 - 120 days Past due 121 - 180 days Past due over 100 days Probability of Collection 99.0% 97.5 % 95.0% 80.0 % 65.0 % 20.0% At the beginning of the year, the Allowance for Doubtful Accounts had a credit balance of 1'27,300. The company has provided for a monthly bad debt expense accrual during the year based on the assumption that 4% of the total credit sales will be uncollectible. Total credit sales for the year 2018 amounted to P8,000,000 and write-offs of uncollectible accounts during the year totaled P292,500. Requirements: Prepare your working papers in good form. Compute for the adjusted balances of Allowance for Doubtful Accounts Prepare the adjusting journal entries to adjust the Allowance for Doubtful Accounts as of December 31, 2018 Professional Company produces paints and related products for sale to the construction industry throughout Metro Manila. While sales have remained relatively stable despite a decline in the amount of new construction. there has been a noticeable change in the timeliness with which the company's customers are paying their bills. The company sells its products on payment terms of 2/10, n/30. In the past. over 75 percent of the credit customers have taken advantage of the discount by paying within 10 days of the invoice date. During the year ended December 31, 2015, the number of customers taking the full 30 days. to pay has increased. Current indications are that less than 60% of the are now taking the discount. Uncollectible accounts as a customers percentage of total credit sales have risen from the 1.5 % provided in the past years to 4 % in the current year. In response to your accounts receivable following report: request for more information on the deterioration of collections, the company's controller has prepared the 64% 18% 8% 5% 3% 236 Professional Company Accounts Receivable Collections December 31, 2015 is normal and The fact that some credit accounts will prove uncollectible annual bad debt write-offs had been 1.5 % of total credit sales for many years. However, during the year 2015, this percentage increased to 4%. The accounts receivable balance is P1,500,000 and the condition of this balance in terms of age and probability of collection is shown below Proportion to total Age of accounts 1-10 days 11-30 days Past due 31- 60 days Fast due. 61 - 120 days Past due 121 - 180 days Past due over 100 days Probability of Collection 99.0% 97.5 % 95.0% 80.0 % 65.0 % 20.0% At the beginning of the year, the Allowance for Doubtful Accounts had a credit balance of 1'27,300. The company has provided for a monthly bad debt expense accrual during the year based on the assumption that 4% of the total credit sales will be uncollectible. Total credit sales for the year 2018 amounted to P8,000,000 and write-offs of uncollectible accounts during the year totaled P292,500. Requirements: Prepare your working papers in good form. Compute for the adjusted balances of Allowance for Doubtful Accounts Prepare the adjusting journal entries to adjust the Allowance for Doubtful Accounts as of December 31, 2018

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The adjusted balances of the Allowance for Doubtful Accounts and the adjusting j... View the full answer