Vincent Ocon Company properly reported the following balances on December
31, 2017
Accounts receivable P1,500,000
Allowance for doubtful accounts 90,000
Accrued interest receivable – loan
320,000
Loan receivable 4,000,000

a. During 2018, Vincent Ocon recorded credit sales of P9,000,000 provision for doubtful accounts at 2% of
credit sales.
Accounts of P100,000 were written off during the year but accounts of P20,000 were subsequently recovered.
The balance of accounts receivable on December 31, 2018 amounted to P2,000,000 and aged as follows:
Classification Balance Estimated Uncollectible
1-60 days P 1,000,000 1%
61-120 days 400,000 5%
121-180 days 300,00010%
181-360 days 200,000 25%
More than one year 100,000- P40,000 is definitely uncollectible
the balance is 80% uncollectible

b. The balance of the loan receivable represents the remaining amount Ioaned to LJIV Company on January
1, 2016. The total amount loaned in 2016 was P5,000,000 The terms of the loan require principal payments
of P1,000,000 each year for 5 years plus interest at 8%. The first principal and interest payment was due on
January 1, 2017. LJJV Company made the required payments during 2017 and 2018. However, during 2018
LJIV Company began to experience financial difficulties, requiring Vincent Ocon to reassess the collectability
of the loan. On December 31, 2018, Vincent Ocon determines that the remaining principal payment will be
collected but the collection of the interest is unlikely.
Based on the above and the result of your audit, determine the following (Round off present value factors to two
decimal places):
1. Allowance for doubtful accounts of accounts receivable, 12/31/2018
2. The net realizable value of Accounts receivable, 12/31/2018.
3. The over(under)statement of the recorded doubtful accounts expense.
4. The loan impairment
5. The interest income for 2019.