Question
ECQ Company recorded the following data at the end of the current year: Accounts Receivable 8,000,000 Credit Sales 20,000,000 Doubtful Accounts Expense (2% of Credit
ECQ Company recorded the following data at the end of the current year:
Accounts Receivable
8,000,000
Credit Sales
20,000,000
Doubtful Accounts Expense (2% of Credit Sales)
400,000
The allowance for doubtful accounts on January 1 has a balance of P150,000. At year end, ECQ Company estimated its doubtful accounts by using percentage of accounts receivables method. The entity estimated than 10% would be a good estimate.
4. What amount of doubtful accounts expense should be reported for the current year?
a.
250,000
b.
400,000
c.
650,000
d.
800,000
5. What is included in the adjusting entry to conform to the new method?
a.
Debit doubtful accounts expense P650,000
b.
Debit doubtful accounts expense P250,000
c.
Debit retained earnings P250,000
d.
Credit retained earnings P250,000
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