.Ping Company finances some of its current operations by factoring its accounts receivable to a finance company. On July 1, 2021, the company factored P2,000,000 of its accounts receivable to Atlas Finance Company. Purchase price was 85% of the receivables factored. Atlas withheld 5% of the purchase price as protection against sales returns and allowances. Sales returns recorded by Ping on the factored accounts receivable totaled P30,000; the balance of the factor’s holdback was settled by the finance company on August 31, 2021. What was the total cash received by Ping Company from this factored accounts after full settlement by the factor?
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
45.Ping Company finances some of its current operations by factoring its
Sales returns recorded by Ping on the factored accounts receivable totaled P30,000; the balance of the factor’s holdback was settled by the finance company on August 31, 2021.
What was the total cash received by Ping Company from this factored accounts after full settlement by the factor?
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