3. Victoria Company purchases the accounts receivable of other companies on a without recourse, notification basis under a regular factoring. At the time the receivables are factored, 15% of the amount factored is charged to the client as commission and recognized as revenue in Victoria's books. Also, 10% of the receivables factored is withheld by Victoria as protection against sales returns or other adjustments. This amount is credited by Victoria to the Client's Retainer account. At the end of each month, payments are made by Victoria to its clients so that the balance in the Client's Retainer account is equal to 10% of unpaid factored receivables. Based on Victoria's doubtful accounts expense experience, an allowance for doubtful accounts of 5% of all factored receivables is to be established. Victoria makes adjusting entries at the end of each month. On January 3, 2021, Anthony Company factored its accounts receivable totaling P1,000,000. By January 31, P800,000 on these receivables had been collected by Victoria. REQUIRED: > Prepare the journal entries on Victoria's and Anthony's books in relation to factoring.

3. Victoria Company purchases the accounts receivable of other companies on a without recourse, notification basis under a regular factoring. At the time the receivables are factored, 15% of the amount factored is charged to the client as commission and recognized as revenue in Victoria's books. Also, 10% of the receivables factored is withheld by Victoria as protection against sales returns or other adjustments. This amount is credited by Victoria to the Client's Retainer account. At the end of each month, payments are made by Victoria to its clients so that the balance in the Client's Retainer account is equal to 10% of unpaid factored receivables. Based on Victoria's doubtful accounts expense experience, an allowance for doubtful accounts of 5% of all factored receivables is to be established. Victoria makes adjusting entries at the end of each month. On January 3, 2021, Anthony Company factored its accounts receivable totaling P1,000,000. By January 31, P800,000 on these receivables had been collected by Victoria. REQUIRED: > Prepare the journal entries on Victoria's and Anthony's books in relation to factoring.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1
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