The balance sheet of the SPLASH ISLAND COMPANY as of December 31, 2017 includes the following account balances:

Accounts Receivable	P800,000
Allowance for Doubtful Accounts(credit)	56,000

Sales and related data from 2018-20 are shown below. The company follows

consistently the policy of adjusting the allowance for doubtful accounts to 7% of

outstanding accounts receivable at year-end.

	2018	2019	2020
Sales on account	P3,000,000	P6,500,000	P4,500,000
Collections (Term: 2/10,n/30):
Within the discount period	490,000	1,764,000	980,000
After the discount period	2,400,000*	3,000,000	4,500,000
Write-offs of worthless accounts:
2018 customer (April 4, 2018)	50,000
2018 customer (July 5, 2018)	140,000**
2019 customer (Nov. 2, 2019)		30,000
2019 customer (Dec. 10, 2020)			90,000

*Excludes recovery collections.

**Partially recovered P110,000 on Dec. 24, 2018.

REQUIRED:

1. Prepare journal entries to record the following selected transactions assuming the company is using the direct write-off method:

a.April 4, 2018 write-off

b. July 5, 2018 write-off

c. Dec. 24, 2018 recovery

d. Dec. 31, 2018 adjusting entry

e. Nov. 2, 2019write-off

f. Dec. 31, 2019 adjusting entry

g. 2020 summary sales (gross method)

h. 2020 summary collections

i. Dec. 10, 2020 write-off

j. Dec. 31, 2020 adjusting entry

Answer rating: 100% (QA)

Solution Journal Entries S No Date Particulars Debit Credit a April 4 2018 Doubtful Accounts Expense 50000 Allowance for Doubtful account 50000 to wri... View the full answer