PROBLEM B: Geoffrey Co. maintains an allowance for doubtful accounts equal to 4% of accounts receivable. On December 31, 2013, the accounts receivable and allowance for doubtful accounts had balances of P500,000 and P20,000, respectively. A summary of receivable transactions for 2014 is provided below: A. Sales on account, all on terms of 2/10,n/30, P4,000,000 B. Collection of accounts receivable: Within the discount period (net of discount) P1,470,000 Beyond the discount period 1,000,000 Note: Prepare one compound journal entry. C. Promissory notes received from customers in settlement of accounts: Date of Note Maturity Date Interest Rate Effective Rate Face Amount 04-01-2014 03-31-2015 Non-interest bearing 10% P400,000 06-01-2014 07-31-2014 12% NIA 600,000 Note: Prepare two separate journal entries. The P600,000 note was subsequently discounted with the bank on July 1, 2014 at 14%. D. Accounts receivable assigned on notification basis on December 1, 2014, P500,000 Terms: 1. Cash advance of 90% 2.5% Service charge on gross accounts assigned. 3.2% interest per month based on outstanding balance of loan On December 31, 2014, Geoffrey received information that P400,000 of assigned accounts receivable was collected less a 2% discount E. P100,000 accounts receivable, invoice dated August 1, 2014 was factored August 12, 2014. A cash advance of 80%, less a 5% service fee based on the total accounts factored was received. The accounts receivable was collected by the factor on August 31, 2014 F. Accounts written off during the year, P25,000 G. Collection of A/R previously written off, P12,000. (Included in item B above.) REQUIRED: B1. Give the journal entry to record sales on account, P4,000,000 B2. Give the joumal entry to record collection of accounts receivable. B3. Give the journal entry to record receipt of the P400,000 non-interest bearing note. B4. Give the journal entry to record receipt of 12%, P600,000 face value note. B5. Give the journal entry to record discounting of P600,000 note. B6. Give the journal entry to record assignment of P500,000 accounts receivable. B7. Give the journal entry to record notes payable - bank. B8. Give the journal entry to record collection by the bank of P400,000 assigned accounts less 2% discount B9. Give the journal entry to record accounts receivable factored. B10. Give the journal entry to record collection of the factor's holdback. B11. Give the journal entry to record accounts written off. B12. Give the journal entry to record recoveries. B13. Give the adjusting entry on December 31, 2014 to record doubtful accounts expense. The company uses percentage of accounts receivable. B14. Give the adjusting entry on December 31, 2014 to record removal of contingent liability. B15. Give the adjusting entry on December 31, 2014 to record amortization of uneamed interest income. For items B16 to B24, supply the missing figures in the December 31, 2014 partial balance sheet: Current Assets: Trade and Other Receivables Accounts Receivable [B16] Accounts Receivable - Assigned [B17] Total [B18] Less: Allowance for Doubtful Accounts [B19) [B20) Notes Receivable [B21) Less: Unearned Interest Income [B22] (B23) Current Liability Notes Payable - Bank [B24)
