prepares interm ncial statement end quarter. The following data are extracted from the first quarter interim tatements of the company of 2019 is as follows: Sales (net) P4M Operating expenses: Selling expenses 88OK Dther Items: nterest revenue 4K nterest expense 33K Cost of Good Sold 2.3M Administrative expenses 421K Rent revenue 30K Ne also extracted information from the trial balance as of June 30, 2019 Cash P720K Note receivable, due 9/1/2019 400K Inventory 2.44M Prepaid Insurance 96K Accumulated Depreciation 2M Accounts Payable 800K Dividends Payable 320K Bonds Payable 10% (due 1/1/2024) 1.2M Discount on Bonds Payable Common stock, P1 par 800K Additional Paid-in capital on common stoc Retained Eamings 2.64M Cost of goods sold 4.86M AR, net 1.03M Property and Equipment 8M Unearned Rent 180K Sales (net) 9M Selling expenses 1.975M
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Additional information:
1. The company uses a perpetual system
2. The company uses control accounts for selling and administrative expenses.
3. The company records and
4. Uncollectible accounts average 0.5% of net sales.
5. The P400K note receivable was received on March 1, 2019. The 6-month note carries an annual interest rate of 12%, the interest to be collected at the maturity date.
6. The balance in the prepaid insurance account represents payment made on January 1, 2019, for a 1-year comprehensive insurance policy.
7. The property and equipment account consists of land, P500K; buildings, P5.5M; and equipment, P2M. The buildings are depreciated over a 25-year life; the equipment over an 8-year life. Straight-line depreciation is used; residual value is disregarded. No acquisitions have made in 2019. The depreciation on the buildings is treated as an administrative expense; depreciation on the equipment as a selling expense.
8. On February 1, 2019, the company rented some floor space to another company, receiving 1 year’s rent of P180K in advance.
9. The bonds pay an interest semiannually on January 1 and July 1. Straight-line amortization of the discount is recorded at the end of each year.
10. The company estimates that its pretax income for the second half of 2019 will total P1.155M. All items in income are subject to the same income tax rate schedule. Th income tax rate schedule is 15% on the first P2M of the taxable income and 30% on the excess. There is no difference between the company’s income tax rate to the nearest tenth of a percent. Income taxes will be paid during the first quarter of 2020.
11. On June 29, 2019, the company had declared and recorded a semiannual dividend of P.40 per share, payable on August 3, 2019.
12. The 8,000 shares of common stock have been outstanding the entire six months of 2019.
What is the total amount of assets as of June 30, 2019?
How much should be recognized as the total for
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