CPA Co. factored accounts receivable of P2,500,000 with credit terms of 3/10, n/30 immediately after the shipment of goods to the customer. The factor charges a 5% service charge based on the gross amount of the receivables factored. In addition, the factor withheld 10% of the amount of the receivables factored to cover return and allowances. Ten days after, CPA Co. granted the customer whose accounts were factored a credit allowance of P120,000 for damage in the shipment. Five days after, final settlement was made with the factor. Assume continuing agreement. On the final settlement with the factor, how much cash is to be debited?

CPA Co. factored accounts receivable of P2,500,000 with credit terms of 3/10, n/30 immediately after the shipment of goods to the customer. The factor charges a 5% service charge based on the gross amount of the receivables factored. In addition, the factor withheld 10% of the amount of the receivables factored to cover return and allowances. Ten days after, CPA Co. granted the customer whose accounts were factored a credit allowance of P120,000 for damage in the shipment. Five days after, final settlement was made with the factor. Assume continuing agreement. On the final settlement with the factor, how much cash is to be debited?

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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