The following information was obtained from the unadjusted trial balance of the Pie Corporation for the...
The following information was obtained from the unadjusted trial balance of the Pie Corporation for the year ending December 31, 2020:
Accounts Receivable P 2,500,000dr
Allowance for Doubtful Accounts 34,000dr
Sales (90% are on credit) 8,400,000cr
Instructions: Determine the following:
1. Doubtful account expense assuming that 6% of the accounts receivable are estimated to be uncollectible.
2. Amortized cost of accounts receivable.
Homework Answers
Answer:
Requirement 1
Doubtful account expense = Accounts Receivable x 6% = 2500000 x 6% = 150000 + 34000 = 184000
Allowance for Doubtful Accounts = 34000 Dr.
Doubtful account expense Dr. 184000 ; Allowance for Doubtful Accounts Cr. 184000
Requirement 2
Amortized cost of accounts receivable.= Accounts Receivable - Allowance for Doubtful Accounts = 2500000 - 184000 = P 2316000
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