The Calachuchi Corporation started its business on January 1, 2020. After considering the collections experience of other companies in the industry, Calachuchi Corporation established an allowance for bad debts estimated to be 5% of credit sales. Outstanding receivables recorded in the books of accounts on December 31, 2020 totaled P575,000, while the allowance for bad debts account had a credit balance of P62,500 after recording estimated doubtful account expense for December and after writing off P12,500 of uncollectible accounts. Further analysis of the companys accounts showed that merchandise purchased in 2020 amounted to P2,250,000 and ending merchandise inventory was P375,000. Goods were sold at 40% above cost. 80% of total sales were on account. Total collections from customers, on the other hand, excluding proceeds from cash sales, amounted to P1,500,000.

1. The recorded accounts receivable as of December 31, 2020 is understated by 2. The doubtful accounts expense for the year ended December 31, 2020 should be 3. The recorded allowance for doubtful accounts receivable as of December 31, 2020 is understated by 4. The net realizable value of accounts receivable as of December 31, 2020 is