When examining the accounts of Palma Company, you ascertain that balance relating to both receivables and payables are included in a single controlling account (called receivables), which has a P23,050 debit balance. An analysis of the details of this account revealed the following: Items Debit Credit Accounts Receivable - customers P 40,000 Accounts receivable - officers (Current collection expected) 2,500 Debit balances - creditors 450 Expense advances to salespersons 1,000 Share capital subscriptions receivable 4,600 Accounts payable for merchandise P 19,250 Unpaid salaries 3,300 Credit balance in customer accounts 2,000 Cash received in advance from customers for goods not yet shipped 450 Expected bad debts, cumulative 500 Required: 1. Give the journal entry to eliminate the above account and to set up the appropriate accounts to replace it.
When examining the accounts of Palma Company, you ascertain that balance relating to both receivables and payables are included in a single controlling account (called receivables), which has a P23,050 debit balance. An analysis of the details of this account revealed the following: Items Debit Credit Accounts Receivable - customers P 40,000 Accounts receivable - officers (Current collection expected) 2,500 Debit balances - creditors 450 Expense advances to salespersons 1,000 Share capital subscriptions receivable 4,600 Accounts payable for merchandise P 19,250 Unpaid salaries 3,300 Credit balance in customer accounts 2,000 Cash received in advance from customers for goods not yet shipped 450 Expected bad debts, cumulative 500 Required: 1. Give the journal entry to eliminate the above account and to set up the appropriate accounts to replace it.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
When examining the accounts of Palma Company, you ascertain that balance relating to both
receivables and payables are included in a single controlling account (called receivables),
which has a P23,050 debit balance. An analysis of the details of this account revealed the
following:
| Items | Debit | Credit |
| Accounts Receivable - customers | P 40,000 | |
| Accounts receivable - officers (Current collection expected) | 2,500 | |
| Debit balances - creditors | 450 | |
| Expense advances to salespersons | 1,000 | |
| Share capital subscriptions receivable | 4,600 | |
| Accounts payable for merchandise | P 19,250 | |
| Unpaid salaries | 3,300 | |
| Credit balance in customer accounts | 2,000 | |
| Cash received in advance from customers for goods not yet shipped | 450 | |
| Expected |
500 |
Required:
1. Give the
accounts to replace it.
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