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Receivable Financing Assignment

This document contains 5 accounting problems related to factoring accounts receivable. Problem 1 asks about calculating gain or loss on assigning accounts receivable as collateral for a loan. Problem 2 asks about calculating loss on factoring when cash is received upfront and more will be received later. Problem 3 asks about calculating initial cash received and total factoring costs when accounts are factored with fees and interest. Problem 4 asks about calculating cash received from factoring with fees retained. Problem 5 asks about calculating initial cash received and loss on factoring with commission and amounts withheld.

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Juliet Leron Medilo
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195 views

Receivable Financing Assignment

This document contains 5 accounting problems related to factoring accounts receivable. Problem 1 asks about calculating gain or loss on assigning accounts receivable as collateral for a loan. Problem 2 asks about calculating loss on factoring when cash is received upfront and more will be received later. Problem 3 asks about calculating initial cash received and total factoring costs when accounts are factored with fees and interest. Problem 4 asks about calculating cash received from factoring with fees retained. Problem 5 asks about calculating initial cash received and loss on factoring with commission and amounts withheld.

Uploaded by

Juliet Leron Medilo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Accounting 122

Assignment 101
6:30 – 7:30

Problem 1
Moon Company assigned P4,000,000 of accounts receivable as collateral for a P2,000,000 6%
loan with a bank. The entity also paid a finance fee of 5% on the transaction upfront. What
amount should be recorded as a gain or loss on the transfer of accounts receivable?
____________
Problem 2
Sunshine Company sold accounts receivable without recourse for P5,300,000. The entity
received P5,000,000 cash immediately from the factor. The remaining P300,000 will be received
once the factor verifies that none of the accounts receivable is in dispute. The accounts
receivable had a face amount of P6,000,000. The entity had previously established an
allowance for bad debts of P250,000 in connection with such accounts. What amount of loss on
factoring should be recognized? ___________
Problem 3
Marga Company factored P6,000,000 of accounts receivable to a finance entity on October 1,
2017. Control was surrendered by Marga Company. The factor assessed a fee of 3% and
retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15%
interest computed on a weighted average time to maturity of the accounts receivable of 54
days.
What is the amount of cash initially received from the factoring? __________
If all accounts are collected, what is the cost of factoring the accounts receivable? ___________
Problem 4
Lolo Boy Company factored without recourse P2,000,000 of accounts receivable with a bank.
The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns and sales
allowances. What amount of cash was received on the sale of accounts receivable? __________
Problem 5
Mama Delia Company sold accounts receivable without recourse with face amount of
P6,000,000. The factor charged 15% commission on all accounts receivable factored and
withheld 10% of the accounts factored as protection against customer returns and other
adjustments. The entity had previously established an allowance for doubtful accounts of
P200,000 for these accounts. By year-end, the entity had collected the factor’s holdback there
being no customer returns and other adjustments.
What amount of cash initially received from factoring? __________
What is the loss on factoring? ___________

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