DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable?

DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

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DEF Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring.
GHI Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Compute the amount of cash initially received from the factoring. *
JKL Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control was surrendered by DEF Company. The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. Assuming that all accounts are collected, what is the gain or (loss) on factoring the accounts receivable? *
Thunder Company factored P5,000,000 of accounts receivable. Control was surrendered by Thunder. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% interest computed on a weighted average time to maturity of the accounts receivable for 30 days. What amount should be reported as loss on factoring assuming the accounts are fully collected by the factor?
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Guasha Corp. factored P600,000 of accounts receivable to Stalactite Corp. on October 1, 2020. Control was surrendered by Guasha. Stalactite accepted the receivables subject to recourse for nonpayment. Stalactite assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, Stalactite charged 15% interest computed on a weighted-average time to maturity of the receivables of fifty-four days. The fair value of the recourse obligation is P9,000. Maria will receive and record cash of:
was surrendered by Zeus Company. Problem 8-17 (AICPA Adapted) Zeus Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on á weighted average time to maturity of the accounts receivable of 54 days. 3. If all accounts are not collected, what is the loss on factoring? a. 713,150 b. 100,000 c. 413,150 d. 313,150 с.
was surrendered by Zeus Company. Problem 8-17 (AICPA Adapted) Zeus Company factored P6,000,000 of accounts receivable to a finance entity at the beginning of current year. Control The factor accepted the accounts receivable subject to recourse for nonpayment. The fair value of the recourse obligation is P100,000. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on á weighted average time to maturity of the accounts receivable of 54 days. 2. If all accounts are collected, what is the loss on factoring the accounts receivable? a. 313,150 b. 180,000 C. 433.150 d. 613,150
Ebasan Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the firance company charged 12% Interest computed on a welghted average time to maturity af the accounts receivable for 60 days. What total amount should be recognized initially as loss on factoring?
10. Ebasan Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The transaction met the criteria to be accounted for as sale but subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000. The finance company assessed a fee of 6% and retained a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% Interest computed on a weighted average time to maturity of the accounts receivable for 60 days. What total amount should be recognized initially as loss on factoring? A. 398,630 B. 898,630 C. 800,000 D. 648,630 11. What amount should be reported as loss on factoring assuming the accounts are fully collected by the factor? A. 398,630 B. 300,000 C. 550,000 D. 400,000
Seller Corp. factored P400,000 of accounts receivable with Buyer, Inc., on a without-recourse basis. The factor charge was 1.75% of the amount of receivables, and an additional 4% was retained to cover probable adjustments. In addition to the factor charge, a finance charge was withheld equal to 12% annually for any amounts advanced prior to the due dates of the receivables. This charge was based on 100% of the face value. The average credit term was 30 days from the date of transfer. According to the terms of the factoring agreement, Seller was to handle returned goods, allowances, and shipping disputes. Buyer was to collect the cash and acknowledge sales discounts, but such discounts were to be charged to Seller. Credit losses were to be absorbed by Buyer. Seller has not recorded any bad debt expense related to the factored. receivables. The following transactions pertain to this factoring arrangement: Aug. 1 The receivable records were transferred to Buyer. 31 Buyer…
On January 1, BB Corp. assigned P500,000 of accounts receivable to the Bagan Finance Company in a transaction accounted for as a secured borrowing. BB gave a 14% note for P450,000 representing 90% of the assigned accounts and received proceeds of P432,000 after deduction of a 4% fee. On February 1, BB remitted P80,000 to Bagan, including interest for 1 month on the unpaid balance. BB's equity in the assigned accounts receivable after the remittance is