Computation on bad debt expense

Assignment Help Finance Basics
Reference no: EM131306530

Problem -

The balance sheet of PERSEVERANCE CORPORATION on December 31, 2005, includes the following cash and receivable balances:

Cash - Davao Bank

 

P 45,000

Currency and coins

 

16,000

Petty cash fund

 

1,000

Cash in bond sinking fund

 

15,000

Notes receivable (including discounted with

recourse, P15,500)

 

36,500

Accounts receivable

P 85,600

 

Less: Allow. for bad debts

(4,150)

81,450

Interest receivable

 

525

Current liability reported in the December 31, 2005, balance sheet included:

Obligation on discounted notes receivable - 15,500

Transactions during 2006 included the following:

1. Sales on account were P767,000.

2. Notes received in settlement of accounts totaled P82,500.

3. Notes receivable discounted as of December 31, 2005, were paid at maturity with the exception of one P3,000 note on which the company had to pay the bank P3,090, that included interest and protest fees. It is expected that recovery will be made on this note early in 2004.

4. Customer notes of P60,000 were discounted with recourse during the year, proceeds from their transfer being P58,500. Of this total, P48,000 matured during the year without notice of protest.

5. Customer accounts of P8,720 were written-off in prior year as worthless.

6. Recoveries of doubtful accounts written-off in prior years were P2,020. (not included in the collection in number 2)

7. Notes receivable collected during the year totaled P27,000 and interest collected was P2,450.

8. On December 31, accrued interest on notes receivable was P630.

9. Uncollectible accounts are estimated to be 5% of the December 31, 2006, accounts receivable balance.

10. Cash of P35,000 was borrowed from Davao Bank, accounts receivable of P50,000 being pledged on the loan. Collections of P19,500 had been made on these receivables included in the total given in transaction (2) and this amount was applied on December 31, 2006, to payment of accrued interest on the loan of P600, and the balance to partial payment of the loan.

11. Petty cash fund was reimbursed based on the following analysis of expenditure vouchers:

Travel expenses                         P112

Entertainment expenses              78

Postage                                     93

Office supplies                           173

Cash over                                 6

12. P3,000 cash was added to the bond sinking fund.

13. Currency on hand at December 31, 2006 was P12,000.

14. Total cash payment for all expenses during the year were P468,000. Charge to General Expense.

1. PERSEVERANCE CORPORATION's Notes Receivable at December 31, 2006 is:

a. P 46,500           b. P 31,000          c. P 30,510           d. P 28,500

2. PERSEVERANCE CORPORATION's Obligation of Discounted of Note Receivable at December 31, 2006 is:

a. P 15,500           b. P 12,000          c. P 11,910           d. P 3,500

3. PERSEVERANCE CORPORATION's Interest Receivable at December 31, 2006 is:

a. P 2,555             b. P 1,155           c. P 630              d. P 525

4. PERSEVERANCE CORPORATION's Bad debts December 31, 2006 is:

a. P 16,005.20     b. P 13,875.50       c. P 11,855.50         d. P 11,825.50

Computation on bad debt expense please.

Reference no: EM131306530

Questions Cloud

What is the present value of this liability : Imprudential, Inc., has an unfunded pension liability of $581 million that must be paid in 20 years. To assess the value of the firm’s stock, financial analysts want to discount this liability back to the present. If the relevant discount rate is 7.4..
Improve market functioning in a developing economy : In China, rural property is owned collectively by the village while being managed under long-term contracts by individual farmers. Why might this be a problem in terms of optimal land managment, use, and allocation?
Can the trump train derail the global supply chain : Can the Trump Train Derail the Global Supply Chain? In the first paragraph, reflect how you feel about his win, and explain the reasons why he "unexpectedly" won the election.
What is the security market line : What is the difference between systematic and unsystematic risk - What is the coefficient of variation on the company's stock?
Computation on bad debt expense : Customer notes of P60,000 were discounted with recourse during the year, proceeds from their transfer being P58,500. Of this total, P48,000 matured during the year without notice of protest. Computation on bad debt expense please
Crater industries just paid an annual dividend : Crater Industries just paid an annual dividend of $1.50 and is expected to pay annual dividends of 1.65 and 2.805 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per ye..
What was the firms cash flow from financing activities : A firm paid dividends of $10,000, paid interest of $20,000, reduced debt principal outstanding (paid off debt) in the amount of $100,000, and sold new stock for $150,000. What was the firm’s cash flow from financing activities?
How rail transportation influenced the us economy : How Rail Transportation Influenced the US Economy, 1825-1900
Find the future value of these cash flows : An investment gives you $200 at the end of year 1, a loss of -$1,000 at the end of year 2, and a gain of $870 at the end of year 3. What is the present value of the cash flows if comparable investments earn 7% annually? Can you find the future value ..

Reviews

Write a Review

 

Finance Basics Questions & Answers

  What would be the effect of shipping costs

Suppose that the pound is pegged to gold at 6 pounds per ounce, whereas the franc is pegged to gold at 12 francs per ounce. This, of course, implies that the equilibrium exchange rate should be two francs per pound. If the current market exchange rat..

  What are the costs of retained earnings and new common stock

The company currently Pays $2.10 cash dividend and has a 6 percent growth rate. What are the costs of retained earnings and new common stock?

  Revenue gained from income tax

If the Spanish government levies a 7% tariff on exports, an 18% tariff on imports, and a 21% income tax, how will the revenue gained from tariffs and the revenue gained from income tax compare?

  Use more control variables rather than depend

In the world of bueisness Why not use more control variables rather than depend on randomization as the means of controlling extraneous variables.

  What is a venture worth?

Return to the discussion of the FrothySlope venture at the beginning of the chapter. Formulate an answer for each of the five questions that are posed under the heading What Is a Venture Worth?

  Deniecehas accumulated in her thrift savings plan at her job

Show calculations- Time value of money Deniecehas accumulated $50,000 in her thrift savings plan at her job at the FederalAviation Administration.The governmentputs in 1% of her pay and matches up to another 4% if she puts in 5% out of herpay.

  Depreciation and accounting cash flow a firm in the third

depreciation and accounting cash flow a firm in the third year of depreciating its only asset which originally cost

  What would happen to the required rates of return

Assume the long-run growth rate of the economy increased by 1 percent and the expected rate of inflation increased by 4 percent. What would happen to the required rates of return on government bonds and common stocks? Show graphically how the effects..

  Why might management fees be a bigger factor

Why might management fees be a bigger factor in your investmentjdecision for bond funds than for stoc funds? Can your conclusion help explain why unmanaged unit investment trusts tend to focus on the fixed-income bracket?

  Suppose your bank account will be worth 420000 in one year

suppose your bank account will be worth 4200.00 in one year. the interest rate discount rate that the bank pays is 5.

  Solve for the nominal rate

1) Suppose the real rate is 2.27% and the inflation rate is 6.35%. Solve for the nominal rate. Use the Fisher Effect formula.

  Annuity due-bond returns-rate of return

Bond Returns. You purchase an 8 percent coupon, 20-year maturity bond when its yield to maturity is nine percent. A year later, the yield to maturity is 10 percent. What is your rate of return over year?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd