receivables
Problem 1
The accounts receivable of FRANCO COMPANY were stated at P1,467,000 in a balance sheet submitted to a banker for credit. You are called upon to audit the report and, upon analysis, the asset was found to consist of the following items:
Due from customers on open account P 1,125,000 Acknowledged claim for damages 22,500 Due from consignee at billed price – cost price being P22,500 30,000 Investment in and advances to affiliated company 150,000 Loans to officers and employees 13,500 Deposits with municipalities – bids for contracts 67,500 Unpaid capital stock subscriptions 60,000 Advances to creditors for merchandise purchased but not received 24,000 Cash advanced to salesmen for traveling expenses 4,500 Allowance for doubtful accounts ( 30,000) P1,467,000
The amount of P1,125,000 due from customers was the remaining balance after deducting accounts with credit balances of P6,000.
During your examination, you noted that on December 31, the company assigned P300,000 of customers’ accounts to secure a 17%, P240,000 note payable. A 1% commission based on the accounts assigned was charged and deducted from the cash received. The client recorded this transaction by a debit to cash and a credit to notes payable.
Questions
1. How much is the Accounts Receivable (gross) balance at December 31?
a. P 759,000 b. P 789,000 c. P 1,101,000 d. P 1,131,000
2. The total current non-trade receivable balance at December 31 is:
a. P 64,500 b. P 96,000 c. P 120,000 d. P 192,000
3. The liability for the accounts receivable – assigned is:
a. P 237,000 b. P 240,000 c. P 243,000 d. P 300,000
4. The total non-trade receivable balance at December 31 is: a. P 342,000 b. P 318,000 c. P 313,500 d. P 245,000
Solution
(1) Claims Receivable 22,500 Accounts receivable 22,500
(2) Sales 30,000
The accounts receivable of FRANCO COMPANY were stated at P1,467,000 in a balance sheet submitted to a banker for credit. You are called upon to audit the report and, upon analysis, the asset was found to consist of the following items:
Due from customers on open account P 1,125,000 Acknowledged claim for damages 22,500 Due from consignee at billed price – cost price being P22,500 30,000 Investment in and advances to affiliated company 150,000 Loans to officers and employees 13,500 Deposits with municipalities – bids for contracts 67,500 Unpaid capital stock subscriptions 60,000 Advances to creditors for merchandise purchased but not received 24,000 Cash advanced to salesmen for traveling expenses 4,500 Allowance for doubtful accounts ( 30,000) P1,467,000
The amount of P1,125,000 due from customers was the remaining balance after deducting accounts with credit balances of P6,000.
During your examination, you noted that on December 31, the company assigned P300,000 of customers’ accounts to secure a 17%, P240,000 note payable. A 1% commission based on the accounts assigned was charged and deducted from the cash received. The client recorded this transaction by a debit to cash and a credit to notes payable.
Questions
1. How much is the Accounts Receivable (gross) balance at December 31?
a. P 759,000 b. P 789,000 c. P 1,101,000 d. P 1,131,000
2. The total current non-trade receivable balance at December 31 is:
a. P 64,500 b. P 96,000 c. P 120,000 d. P 192,000
3. The liability for the accounts receivable – assigned is:
a. P 237,000 b. P 240,000 c. P 243,000 d. P 300,000
4. The total non-trade receivable balance at December 31 is: a. P 342,000 b. P 318,000 c. P 313,500 d. P 245,000
Solution
(1) Claims Receivable 22,500 Accounts receivable 22,500
(2) Sales 30,000