ACCTG101 Midterm Activity 1

ACCTG101

Midterm Activity 1

Arthur Rosada, CPA

General Instruction:

• All "Question" slides are timed. 3 minutes for each slide

• Question 3 onwards have explanation after you answer each.

• For questions 9 and 10, make sure to refer to the details attached before the question slide.

• Have your scratch paper, pen and calculator with you when you answer this activity.

• Enjoy!

Multiple Choice

Question 1:

If the company’s sales on account amounted to P200,000 and doubtful accounts expense is 5% of sales, how much is the doubtful accounts expense for the period?

• P200,000

• P20,000

• P10,000

Multiple Choice

Question 2:

The company’s accounts receivable beginning balance is P50,000. Sales on account amounted to P200,000 and doubtful accounts expense is 5% of sales. How much is the doubtful accounts expense for the period?

• P200,000

• P20,000

• P10,000

Multiple Choice

Question 3:

The company’s accounts receivable beginning balance is P50,000. The allowance for doubtful accounts has a balance of P10,000. Sales on account amounted to P200,000 and doubtful accounts expense is 5% of sales. How much is the allowance for doubtful accounts at the end of the period?

• P200,000

• P20,000

• P10,000

Question 3 Explanation

• The allowance has a balance of P10,000 before recording the new doubtful accounts.  

• After recording a debit to doubtful accounts expense and a credit to allowance, the allowance is increased by P10,000, which is the amount recorded.

•  Hence, the doubtful accounts expense for the period is P20,000.

Multiple Choice

Question 4:

The company’s accounts receivable beginning balance is P50,000. The allowance for doubtful accounts has a balance of P15,000. Sales on account amounted to P200,000 and doubtful accounts expense is 5% of sales. How much is the allowance for doubtful accounts at the end of the period?

• P25,000

• P20,000

• P10,000

Question 4 Explanation:

• The allowance has a balance of P15,000 before recording the new doubtful accounts. 

• After recording a debit to doubtful accounts expense and a credit to allowance, the allowance is increased by P10,000, which is the amount recorded. 

• Hence, the doubtful accounts expense for the period is P25,000.

Multiple Choice

Question 5

The company’s accounts receivable beginning balance is P50,000. Sales on account amounted to P200,000 and doubtful accounts expense is 5% of sales. Collection amounted to P100,000. How much is the doubtful accounts expense for the period?

• P200,000

• P20,000

• P10,000

Question 5 Explanation:

• The allowance has a balance of P10,000 before recording the new doubtful accounts. 

• After recording a debit to doubtful accounts expense and a credit to allowance, the allowance is increased by P10,000, which is the amount recorded. 

• But, there is no existing balance for doubtful accounts expense before such recording.  

• Hence, the doubtful accounts expense for the period is P10,000.

Multiple Choice

Question 6:

The company’s accounts receivable beginning balance is P50,000. The allowance for doubtful accounts has a balance of P10,000. Sales on account amounted to P200,000. Allowance for doubtful accounts is 10% of the accounts receivable balance. Collection amounted to P100,000. How much is the allowance for doubtful accounts at the end of the year?

• P15,000

• P20,000

• P10,000

Question 6 Explanation

• Accounts receivable has a beginning balance of P50,000.

•  P200,000 was added to accounts receivable because of the sales. 

•  Accounts receivable was reduced by the collection amounting to P100,000.  

• Hence, it has a balance of P150,000.  

• Allowance is 10% of P150,000 or P15,000.

Multiple Choice

Question 7:

The company’s accounts receivable beginning balance is P50,000. The allowance for doubtful accounts has a balance of P10,000. Sales on account amounted to P200,000. Collection amounted to P100,000. Compute first for the allowance at the end of the year. Before you record doubtful accounts expense, the allowance was already P10,000. Allowance for doubtful accounts is 10% of accounts receivable. How much is the doubtful accounts expense to be recorded?

• P15,000

• P20,000

• P5,000

Question 7 Explanation:

• Accounts receivable has a beginning balance of P50,000.  

•  P200,000 was added to accounts receivable because of the sales. 

•  Accounts receivable was reduced by the collection amounting to P100,000.  

• Hence, it has a balance of P150,000.  

• Allowance is 10% of P150,000 or P15,000.

• Before recording the increase in doubtful accounts, the balance of the allowance is P10,000.  It should be increased to P15,000. The increase is P5,000.

• Recording:

  Doubtful accounts expense           5,000

     Allowance for doubtful accounts              5,000

Multiple Choice

Question 8:

The company’s accounts receivable beginning balance is P50,000. The allowance for doubtful accounts has a balance of P10,000. Sales on account amounted to P200,000. Doubtful accounts expense is initially computed by multiplying sales by 1%. Collection amounted to P100,000. Compute first for the allowance at the end of the year. Before you record doubtful accounts expense, the allowance was already P10,000. Allowance for doubtful accounts based on the remaining accounts receivable is 10%. How much is the doubtful accounts expense to be recorded?

• P15,000

• P20,000

• P5,000

Refer to this for Question 9

Multiple Choice

Question 9:

Ryan estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2020, the allowance for uncollectible should have a credit balance of

• P90,000

• P82,000

• P38,000

• P30,000

Question 9 Explanation:

• P1,000,000 X 0.03 = P30,000

Refer to this for Question 10

Multiple Choice

Question 10:

Allowance for uncollectible accounts have not yet been recorded during the current year. The P28,000 allowance is a carry over from the previous year. Ryan estimates that 1% of the net sales will become uncollectible. After adjustment at December 31, 2020, the allowance for uncollectible should have a credit balance of

• P90,000

• P82,000

• P58,000

• P30,000

Question 10 Explanation:

• P3,000,000 X 0.01 = P30,000

• The P30,000 will be recorded as debit to uncollectible accounts expense and a credit to allowance for uncollectible accounts. 

• Before this journal entry, the balance of the allowance was P28,000.  

• This will be increase by P30,000.  

• Hence, the answer is P58,000.

THAT'S ALL!

Please prepare for a quiz. 😁