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Ayla company is currently having a distressed records

regarding her receivables. She asked for your help to audit

the balance of her receivables for the year $2023.$ The

following are the information she has given to you

I. Ayla is recording her doubtful accounts expense based on

the credit sales for the year. The percentage she is using

constantly all throughout the operations is at $5\%.$

II$.$ The beginning balance of the Allowance for doubtful

accounts for the year $2023$ was at $P900,000$

III. Ayla uses aging method for the estimation of her doubtful

accounts. IV$.$ There was a write$-$off of P$200,000$ of doubtful

accounts for the year

V$.$ Ayla initially recorded her doubtful accounts expense at

$P200,000$

She has given to you her information regarding her amount

of credit sales:

Days Account Outstanding Amount Probability of Collection

Less than $16$ days $4,000,00098\%$

Between $16$ and $50$ days $2,500,00080\%$

Between $51$ and $100$ days $1,600,00075\%$

Between $101$ and $200$ days $1,000,00050\%$

Between $201$ and $365$ days $500,00020\%$

$1.$ What was the first adjustment to the Doubtful accounts expense due to initial incorrect recording amount to arrive at the required policy of recording the doubtful accounts expense?

a$.280,000$

b$.700,000$

c$.980,000$

d$.480,000$

$2.$ What is the ending balance of allowance for doubtful accounts for the year?

a$.1,888,000$

b$.1,880,000$

c$.1,088,000$

d$.1,808,000$

$3.$ How much is the next adjustment to the doubtful accounts expense in order to arrive to the total correct doubtful accounts expense for the year?

a$.280,000$

b$.700,000$

c$.980,000$

d$.480,000$

$4.$ What is the amount of doubtful expense according to the policy?

a$.280,000$

b$.700,000$

c$.980,000$

d$.480,000$

$5.$ What is the adjusting journal entry to the next adjustment to the doubtful accounts expense in order to arrive to the total correct doubtful accounts expense for the year?

a$.$ Debit Bad Debt Expense Credit Allowance for Doubtful accounts both at $280,000$

b$.$ Debit Bad Debt Expense Credit Allowance for Doubtful accounts both at $700,000$

c$.$ Debit Bad Debt Expense Credit Allowance for Doubtful accounts both at $980,000$

d$.$ Debit Bad Debt Expense Credit Allowance for Doubtful accourits both at $480,000$nd $50$ days $2,500,00080\%$

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