You are assigned to audit Holidays Inc. for the year ended June 30, 2019. You were able to extract the following unadjusted balances from the client's records:

 
The Accounts receivable were circularized as at June 30, 2019 and the following exceptions/replies have not been disposed of at the date of your audit.

 

Based on your discussion with the client, the following estimated rates are appropriated for computing the uncollectible accounts: 

60 days and below 2% 61 120 days 10% Over 120 days 20% 

1. What is the adjusted accounts receivable balance? 

2. What is the required allowance for bad debts? 

3. Assuming no other entries affected the allowance for doubtful accounts for the year, how much is the bad debt expense? 

Transcribed Image Text:

Accounts receivable Allowance for doubtful accounts Accounts receivable, subsidiary records 60 days and below 61 - 120 days Over 120 days Credit balance P 221,250 ( 7,500) 110,625 66,375 51,750 7,500) The credit balance in the accounts receivable represents collection from a customer whose account had been written off as uncollectible in the previous year. Accounts receivable Allowance for doubtful accounts Accounts receivable, subsidiary records 60 days and below 61 - 120 days Over 120 days Credit balance P 221,250 ( 7,500) 110,625 66,375 51,750 7,500) The credit balance in the accounts receivable represents collection from a customer whose account had been written off as uncollectible in the previous year.

Answer rating: 100% (QA)

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