Case 2: In connection with the audit of the financial statements of Praktis Corporation, your audit senior instructed you to examine the company's accounts receivable. Prior to any adjustments you were able to extract the following balances from Praktis' trial balance as of December 31, 2018. Accounts Receivable P 442,500 Allowance for Doubtful Accounts 15,000 From the schedule of accounts receivable as of December 31, 2018, you determined that this account includes the following: Accounts with debit balances: 60 days old and below P 238,500 61 to 90 days 117,200 Over 90 days 85,400 P 441,100 Advances to Officers 16,400 Accounts with credit balance (15,000). Accounts receivable per GL P 442,500 The credit balance in customer's account represents collection from a customer whose account had been written-off as uncollectible in 2017. Accounts receivable for more than a year totaling P21,000 should be written off. Confirmation replies received directly from customers disclosed the following exceptions: Customer Customer's Comments Audit Findings Jessie The goods sold on December The client failed to record credit memo no. 23 for 1 were returned on P12,000. The merchandise was included in the December 16, 2018. ending inventory at cost. Robert We do not owe this amount Investigation revealed that goods sold for P16,000 *%# (bad word). We did were shipped to Robert on December 29, 2018, not receive any merchandise terms FOB Shipping Point. The goods were lost in from your company. transit and the shipping company has acknowledged its responsibility for the loss of the merchandise. Anne is an employee of Praktis. Starting November 2018, all company employees were entitled to a special discount. Anne I am entitled to a 10% Merchandise billed for P18,000 were consigned to employee discount. Your bill Jay-ar on December 30, 2018. The goods cost should be reduced by P1,200. P13,000. Jay-ar We have not yet sold the The sale of merchandise on December 18, 2018 was goods. We will remit the paid by Roy on January 6, 2019. proceeds as soon as the goods are sold. We do not owe you P20,000. This amount represents freight paid by the customer We already paid our accounts for the merchandise shipped on December 17, 2018, as evidenced by OR #1234. terms, FOB destination collect. Reduce your bill by P1,500. Roy Carla Based on your discussion with Praktis' credit manager, you both agreed that an allowance for doubtful accounts should be maintained using the following rates: 60 days old and below 1% 61 to 90 days 2% Over 90 days 5% Requirements: 1. Prepare your working papers in good form. 2. Compute for the adjusted balances of Accounts Receivables. 3. Compute for the adjusted balances of Allowance for Doubtful Accounts. 4. Prepare the adjusting journal entries as of December 31, 2018 Case 2: In connection with the audit of the financial statements of Praktis Corporation, your audit senior instructed you to examine the company's accounts receivable. Prior to any adjustments you were able to extract the following balances from Praktis' trial balance as of December 31, 2018. Accounts Receivable P 442,500 Allowance for Doubtful Accounts 15,000 From the schedule of accounts receivable as of December 31, 2018, you determined that this account includes the following: Accounts with debit balances: 60 days old and below P 238,500 61 to 90 days 117,200 Over 90 days 85,400 P 441,100 Advances to Officers 16,400 Accounts with credit balance (15,000). Accounts receivable per GL P 442,500 The credit balance in customer's account represents collection from a customer whose account had been written-off as uncollectible in 2017. Accounts receivable for more than a year totaling P21,000 should be written off. Confirmation replies received directly from customers disclosed the following exceptions: Customer Customer's Comments Audit Findings Jessie The goods sold on December The client failed to record credit memo no. 23 for 1 were returned on P12,000. The merchandise was included in the December 16, 2018. ending inventory at cost. Robert We do not owe this amount Investigation revealed that goods sold for P16,000 *%# (bad word). We did were shipped to Robert on December 29, 2018, not receive any merchandise terms FOB Shipping Point. The goods were lost in from your company. transit and the shipping company has acknowledged its responsibility for the loss of the merchandise. Anne is an employee of Praktis. Starting November 2018, all company employees were entitled to a special discount. Anne I am entitled to a 10% Merchandise billed for P18,000 were consigned to employee discount. Your bill Jay-ar on December 30, 2018. The goods cost should be reduced by P1,200. P13,000. Jay-ar We have not yet sold the The sale of merchandise on December 18, 2018 was goods. We will remit the paid by Roy on January 6, 2019. proceeds as soon as the goods are sold. We do not owe you P20,000. This amount represents freight paid by the customer We already paid our accounts for the merchandise shipped on December 17, 2018, as evidenced by OR #1234. terms, FOB destination collect. Reduce your bill by P1,500. Roy Carla Based on your discussion with Praktis' credit manager, you both agreed that an allowance for doubtful accounts should be maintained using the following rates: 60 days old and below 1% 61 to 90 days 2% Over 90 days 5% Requirements: 1. Prepare your working papers in good form. 2. Compute for the adjusted balances of Accounts Receivables. 3. Compute for the adjusted balances of Allowance for Doubtful Accounts. 4. Prepare the adjusting journal entries as of December 31, 2018