Answered: BB Corp.’s accounts receivable…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter10: Accounting For Sales And Cash Receipts

Section: Chapter Questions

Problem 7SEB: JOURNALIZING SALES RETURNS AND ALLOWANCES Enter the following transactions starting on page 60 of a...

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Question

BB Corp.’s accounts receivable subsidiary ledger shows the following information:

Customer	Account Balance December 31, 2022	Sales Invoices
Date	Amount
Pray Inc.	P 35,180	12/6/2022	P 14,000
11/29/2022	21,180
Patience Co.	20,920	9/27/2022	12,000
8/20/2022	8,920
Love Corp.	30,600	12/8/2022	20,000
10/25/2022	10,600
Happy Co.	45,140	11/17/2022	23,140
10/9/2022	22,000
Kindness Corp.	31,600	12/12/2022	19,200
12/2/2022	12,400
Gentleness Inc.	17,400	9/12/2022	17,400

The estimated bad debts rates below are based on BB’s receivable collection experience.

Age of Accounts	Rate
0 -30 days	1.00%
31- 60 days	1.50%
61-90 days	3.00%
91 - 120 days	10.00%
over 120 days	50.00%

The allowance for bad debts had beginning balance of P6,500.

Statement 1: The net realizable value of the accounts receivable at December 31, 2022 is P165,170.

Statement 2: The adjustment for allowance for bad debts includes a credit of P56,340.

Group of answer choices

Only statement 1 is true

Both statements are true

Both statements are false

Only statement 2 is true

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