Rifle Co. is a distributing company selling toy guns to retailers at 10/15, 5/20, n/30 and it
Question:
Rifle Co. is a distributing company selling toy guns to retailers at 10/15, 5/20, n/30 and it provides for uncollectible accounts based on aging of receivables at year-end. The balance of selected accounts taken from the December 31, 2020 statement of financial position are as follows:
Accounts Receivable – P19,800; Allowance for Bad Debts – P300
The following transactions (in summary) affecting accounts receivable occurred during the year ended December 31, 2021:
Sales on account - 20,180
Cash received from customers - 20,000
Cash received includes the following:
Customers paying within the 15-day discount period - ?
Customers paying within the 20-day discount period - 3,800
Recovery of accounts written off - 106
Customers paying beyond the discount period - 15.84444% of customers paying within 15 days
Accounts receivable written off as worthless - 20
Credit memoranda for sales returns - 512
An aging of the accounts receivables and uncollectible accounts at December 31, 2021 revealed the following:
An aging of the accounts receivables and uncollectible accounts at December 31, 2021 revealed the following:
Age - Amount | Probability of Non-collection
Less than 30 days - 4,100 | 5%
31-90 days - 2,400 | 8%
91-120 days - 563 | 10%
More than 120 days - Balance | 17%
1. At what amount should Bad Debts Expense be reported at December 31, 2021 Income Statement?
2. At what amount should A/R (net of Allowance for Bad Debts) be reported at December 31, 2021 Statement of Financial Position?
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson