MXC Company is a retailer. Its entered into a continuing agreement with SHN Financing Corporation to factor its accounts receivable to the latter. They agreed on the following: Credit terms is 5/10, n/30 5% commission to SHN based on the gross amount of the accounts receivable 20% of the gross uncollected accounts receivable will be withheld by SHN Returns by customers will be honored During April 2020, the following transactions took place relating to said agreement: April 14 MXC sold goods on account to NVG Company, P300,000 and accounts were immediately factored by SHN. April 16 MXC sold goods on account to MXG Company, P200,000 and accounts were immediately factored by SHN. April 18 NVG returned goods amounting to P20,000. April 20 NVG paid in full. April 25 MXC sold goods on account to AFN Company, P600,000 and accounts were immediately factored by SHN. April 26 AFN paid in full. Prepare the journal entries and compute the balance of the account Receivable from Factor on April 30, 2020 by using a T-account.
Bad Debts
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.
Problem 4
MXC Company is a retailer. Its entered into a continuing agreement with SHN Financing Corporation to factor its
Credit terms is 5/10, n/30
5% commission to SHN based on the gross amount of the accounts receivable
20% of the gross uncollected accounts receivable will be withheld by SHN
Returns by customers will be honored During April 2020, the following transactions took place relating to said agreement:
April 14 MXC sold goods on account to NVG Company, P300,000 and accounts were immediately factored by SHN.
April 16 MXC sold goods on account to MXG Company, P200,000 and accounts were immediately factored by SHN.
April 18 NVG returned goods amounting to P20,000.
April 20 NVG paid in full. April 25 MXC sold goods on account to AFN Company, P600,000 and accounts were immediately factored by SHN.
April 26 AFN paid in full.
Prepare the
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