AUDIT OF RECEIVABLES
Practice Problems
PROBLEM NO.3
You are examining the financial statement of SALUYOT COMPANY for the year ended December 31,
2016. Your audit of accounts receivable and other related accounts disclosed the following information:
1. The December 31, 2016, balance in the Account receivable control account is P788,000.
2. The only entries in the Bad Debts Expense account were:
a. A credit for P1,296 on December 1, 2016, because customer A remitted in full for the account charged
off October 31, 2016.
b. A debit on December 31 for the amount of the credit to Allowance for Bad Debts.
3. The Allowance for Bad Debts account is presented below:
Date Particulars Debit Credit Balance
Jan. 1 Balance P15,250
Oct. 31 Uncollectible:
Costumer A P1,296
B 3,280
C 2,256 P6,032 9,218
Dec. 31 3% of P788,000 P23,640 32,858
4. An aging schedule of the accounts receivable as of December 31, 2016, and the decisions are as shown
in the table below:
Amount to which the allowance
Net Debit is to be adjusted after adjustments
AGE Balance and corrections have been made
0-1 month P372,960 1%
1-3 months 307,280 2%
3-6 months 88,720 3%
Over 6 months 24, 000 Definitely uncollectible, P4,000;
P8,000 is considered to be 50%
Uncollectible; the remainder is
Estimated to be 80% collectible
P792,960
5. There is a credit balance in one account receivable (0-1 month0 of P8,000; it represents an advance on
a sales contract; also there is a credit balance in one of the 1-3 months accounts receivable of P2,000 for
which merchandise will be accepted by the customers.
6. The Accounts Receivable control account is not in agreement with the subsidiary ledger. The
differences cannot be located, and the company’s accountant decides to adjust the control to the sum of
the subsidiaries after corrections are made.
1. The adjustment to correct the entry made on December 1, 2016, is
A. Bad debts expense 1,296
Accounts receivable 1,296
B. Bad debts expense 1,296
Allowance for bad debts 1,296
C, Accounts receivable 1,296
Allowance for bad debts 1,296
2. The required allowance balance (per aging) on December 31, 2016, is
A. P29,354 C. P19,858
B. P19,058 D. P32,858
Practice Problems
PROBLEM NO.3
You are examining the financial statement of SALUYOT COMPANY for the year ended December 31,
2016. Your audit of accounts receivable and other related accounts disclosed the following information:
1. The December 31, 2016, balance in the Account receivable control account is P788,000.
2. The only entries in the Bad Debts Expense account were:
a. A credit for P1,296 on December 1, 2016, because customer A remitted in full for the account charged
off October 31, 2016.
b. A debit on December 31 for the amount of the credit to Allowance for Bad Debts.
3. The Allowance for Bad Debts account is presented below:
Date Particulars Debit Credit Balance
Jan. 1 Balance P15,250
Oct. 31 Uncollectible:
Costumer A P1,296
B 3,280
C 2,256 P6,032 9,218
Dec. 31 3% of P788,000 P23,640 32,858
4. An aging schedule of the accounts receivable as of December 31, 2016, and the decisions are as shown
in the table below:
Amount to which the allowance
Net Debit is to be adjusted after adjustments
AGE Balance and corrections have been made
0-1 month P372,960 1%
1-3 months 307,280 2%
3-6 months 88,720 3%
Over 6 months 24, 000 Definitely uncollectible, P4,000;
P8,000 is considered to be 50%
Uncollectible; the remainder is
Estimated to be 80% collectible
P792,960
5. There is a credit balance in one account receivable (0-1 month0 of P8,000; it represents an advance on
a sales contract; also there is a credit balance in one of the 1-3 months accounts receivable of P2,000 for
which merchandise will be accepted by the customers.
6. The Accounts Receivable control account is not in agreement with the subsidiary ledger. The
differences cannot be located, and the company’s accountant decides to adjust the control to the sum of
the subsidiaries after corrections are made.
1. The adjustment to correct the entry made on December 1, 2016, is
A. Bad debts expense 1,296
Accounts receivable 1,296
B. Bad debts expense 1,296
Allowance for bad debts 1,296
C, Accounts receivable 1,296
Allowance for bad debts 1,296
2. The required allowance balance (per aging) on December 31, 2016, is
A. P29,354 C. P19,858
B. P19,058 D. P32,858
