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Write Your Good-Form Solutions Below and Bolden Your Answer: Cash Received From Factoring 692,424.66 692,250.00

Taylor Company factored P750,000 of accounts receivable at year-end, surrendering control to the factor. The factor accepted the accounts receivable subject to recourse for nonpayment and assessed a 2% fee, retaining a 4% holdback. The factor also charged 12% interest on a 51-day maturity. **a. The amount of cash initially received from the factoring is P692,424.66.** **b. Assuming all accounts receivable are collected, the total cost of factoring the accounts receivable is P27,575.34.**

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Anne Estrella
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226 views

Write Your Good-Form Solutions Below and Bolden Your Answer: Cash Received From Factoring 692,424.66 692,250.00

Taylor Company factored P750,000 of accounts receivable at year-end, surrendering control to the factor. The factor accepted the accounts receivable subject to recourse for nonpayment and assessed a 2% fee, retaining a 4% holdback. The factor also charged 12% interest on a 51-day maturity. **a. The amount of cash initially received from the factoring is P692,424.66.** **b. Assuming all accounts receivable are collected, the total cost of factoring the accounts receivable is P27,575.34.**

Uploaded by

Anne Estrella
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Taylor Company factored P750,000 of accounts receivable at year-end. Control was surrendered.

The factor
accepted the accounts receivable, subject to recourse for nonpayment.

The factor assessed a fee of 2% and retained a holdback equal to 4% of the accounts receivable.

In addition, the factor charged 12% interest computed on a maturity of fifty-one days. The fair value of the
recourse obligation is P15,000.

REQUIRED
a. What is the amount of cash initially received from the factoring?
b. Assuming all accounts receivable are collected, what is the cost of
factoring the accounts
receivable?

Write your good-form solutions below and bolden your answer

Accounts
receivable 750,000.00
Factor's holdback 30,000.00
Factoring fee 15,000.00
Interest on
factoring 12,575.34 or (750,000 x 12% x 51/360) = 12,750.00
Cash received from factoring 692,424.66 or 692,250.00

Factoring fee 15,000.00


Interest on
factoring 12,575.34 or (750,000 x 12% x 51/360) = 12,750.00
Total cost of factoring 27,575.34 or 27,750.00

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