TOTAL CURRENT RECEIVABLES ACTIVITY #1: TOTAL CURRENT RECE

TOTAL CURRENT RECEIVABLES

ACTIVITY #1: TOTAL CURRENT RECEIVABLES:

ACTIVITY #1: TOTAL CURRENT RECEIVABLES:
Imagine you are the accountant of Entity A. You have been provided with the documents
shown below for the purpose of determining the correct balance of your company's
current receivables as of December 31, 20x1. Analyze the attached documents below
and answer the requirements.

The following were not included in the schedule above:

Your inquiry with the shipping department confirmed that sales order (SO) #2102394
has in fact been shipped on December 31, 20x1 under FOB Shipping point term. The
related sales invoice was not recorded because Ms. Rose, your accounting staff left
early for a date with her boyfriend. For a moment there, you felt a little bit jealous and
lonely. But you said to yourself, "Oh well, I love accounting and accounting loves me. We
will be BFFs for life. Yahoo!"

You found the following note attached to SO #2102395:

The following documents were also not recorded as of December 31, 20x1:\

Your securities count on December 31, 20x1 revealed that your company holds 10,000
shares of Luigi Company representing 2% of ownership interest. Your company's right to
receive the dividends was established on this date.
*Hint: Entity A's chart of accounts includes a "Dividend Income" account.
REQUIREMENTS:
a. How much is the adjusted accounts receivables as of December 31, 20x1? (10
points)
b. How much is the total receivables to be presented in the current assets section of
Entity A's December 31, 20x1 statement of financial position? (10 points)
c. Provide the necessary adjusting entries. (10 points)

ACTIVITY #1: TOTAL CURRENT RECEIVABLES Solutions:
Requirement (a): Adjusted accounts receivable
Unadjusted accounts receivable 10,537,089
Credit balance (DEF Co.) 341,236
Sales Order #21022394 20,000
Adjusted accounts receivable 10,898,325
Requirement (b): Total current receivables
Adjusted accounts receivable 10,898,325
Notes receivable (3-month) 35,000

Dividends receivable (10,000 sh. x ₱5) 50,000
Total Current receivables 10,983,325
Requirement (c): Adjusting entries
Accounts receivable 341,236
Advances from customers 341,236
To eliminate the credit balance in DEF Co.’s account
Account receivable 20,000
Sales 20,000
To record the unrecorded sales
Notes receivable 35,000
Cash 35,000
To record the loan given to Mr. Wilson
Dividends receivable 50,000
Dividend income 50,000
To accrue the dividends

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