5. Lorie Anne Company finances some of its current operations by factoring its accounts receivable to a finance company. On July 1, 2020, Lorie Anne factored P 2,000,000 of its accounts receivable to Buco Finance Company. Buco’s factoring fee was 15% of the receivable purchased. Buco withheld 5% of the purchase price as protection against sales returns and allowances. What was the net cash received by Lorie Anne from these factored accounts?
6. Real Company sold P300,000 of its accounts receivables without recourse to a factoring agency. The purchaser assessed a finance charge of 5%. It also retained 5% to cover adjustments (sales returns, discounts, etc.). What is the journal entry that would be recorded by Real Company on the date of factoring?
8. On January 1, 2020, AIN’T NO VALLEY LOW ENOUGH Company sold computers costing ₱700,000 with accumulated depreciation of ₱70,000 in exchange for a ₱650,000 note receivable payable in four installments as follows: ₱400,000 – 1st year; ₱50,000 – 2nd year; ₱20,000 – 3rd year; and ₱180,000 – 4th year. A 7% interest is also payable yearly. The effective rate is 5%. How much is the discount on notes receivable on January 1, 2020?
Please answer correctly and provide solutions po hehe it's part of our quizzes po hehe, thanks
5 | Computation of Net Cash Received | |
a | Account Receivable | 200000 |
b | Factoring fee | 15% |
c | Factoring Cost (a*b) | 30000 |
d | Amount to be Received (a-c) | 170000 |
e | Amount withheld % | 5% |
f | Amount withheld (d*e) | 8500 |
g | Net Cash Received (a-c-f) | 161500 |
6 | Cash a/c | Dr | 270750 | |
Finance Co a/c | Dr | 14250 | ||
Loss On Factoring a/c | Dr | 15000 | ||
Account Receivable a/c | Cr | 300000 |
8.The effective rate is 5% hence discount on note receivable is 650000*5%=32500
Get Answers For Free
Most questions answered within 1 hours.