Cabanes Factors provides financing to other companies by purchasing their accounts receivable on a non-recourse basis. Cabanes charges a commission to its clients of 15% of all receivables factored. In addition, Cabanes withholds 10% of receivables factored for protection against sales returns or adjustments. Cabanes credits the 10% withheld to Client Retainer and makes payments to clients at the end of each month so that the balance in the retainer is equal to 10% of unpaid receivables at the end of the month. Cabanes recognizes its 15% commissions as revenue at the time the receivables are factored. Also, experience has led Cabanes to establish allowance for bad debts of 4% of all receivables purchased. On January 2, 2021, Cabanes purchased receivables from Cabana Company totaling P3,000,000. Cabana has previously established an allowance for bad debts for these receivables of P100,000. By January 31, Cabanes had collected P2,500,000 on these receivables. 40. What amount of receivable would be shown by Cabana Company relating to the factoring transaction on January 31, 2021?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
1. What amount of receivable would be shown by Cabana Company relating to the factoring transaction on January 31, 2021?
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