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C.

DEPRECIATION

On January 1, 2015 Alpha Co. bought a computer equipment amounting to P185,000 for cash. The computer
equipment has a useful life of 3 years and can be sold as scrap for P5,000 at the end of its useful life. The
computer equipment was sold on April 1, 2017.

Questions:
a. What was the journal entry of Alpha Co. on January 1, 2015 related to its purchase of the computer
equipment?

b. What is the journal entry of Alpha Co. on December 31, 2015 to adjust for the depreciation of the
computer equipment?

c. How much is the Depreciation Expense in


1. 2015
2. 2016
3. 2017

d. What is the cost of the computer equipment as of


1. December 31 2015
2. December 31 2016

e. What is the amount of accumulated depreciation as of


1. December 31 2015
2. December 31 2016

f. What is the carrying amount of the computer equipment as of


1. December 31 2015
2. December 31 2016

g. What is the journal entry on April 1 2017 assuming:


1. The computer equipment was sold for P65,000 cash?

2. The computer equipment was sold for P40,000 cash?


D. ALLOWANCE FOR DOUBTFUL ACCOUNTS

On January 1, JV Co. has P500,000 beginning balance in its Accounts Receivables. The related Allowance for
Doubtful Acounts has a beginning balance of P10,000. Total Sales of the year amounted to P2,000,000, of
which P1,200,000 were made on credit. Collection on account totaled P650,000. Accounts totaling P5,000
were proved to be worthless and needed to be written off. Accounts previously written off amounting to
P2,500 were recovered during the year. Aging of the Accounts Receivables as of December 31 is as follows:
Age Amount
Current P500,000
1 30 days 300,000
31 60 days 150,000
Over 60 days 95,000

Questions:
a. What is the journal entry to record the sales for the year?
b. What is the journal entry to record the collection of on accounts receivables?
c. What is the journal entry to record the write off of accounts receivable under:
1. Direct write-off method 2. Allowance Method

d. What is the journal entry to record the recoveries of the account under:
1. Direct write-off method 2. Allowance Method

e. What is the journal entry to record doubtful account expense at the end of the year under:
(1) Direct write-off method?
(2) Allowance method
2.1 If the doubtful accounts are recognized at 1% of Sales for the year?

2.2 If the doubtful accounts are recognized t 2% of Ending Receivables?

2.3 If the doubtful accounts are recognized based on aging of ending receivables with the following
probabilities of collectability: Current: 100% collectable; 1 30 days: 98% collectable ; 31 60
days: 95% collectable ; Over 60 days: 90% collectable