On December 1, 2020, ABC Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from certain bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted in advance on the assigned accounts. The December collections of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2020 and the note payable. The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned accounts of P300,00O. Compute for the amount of cash received from the assignment of accounts receivable on December 1, 2020. *

On December 1, 2020, ABC Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from certain bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted in advance on the assigned accounts. The December collections of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2020 and the note payable. The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned accounts of P300,00O. Compute for the amount of cash received from the assignment of accounts receivable on December 1, 2020. *

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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Question

On December 1, 2020, ABC Company assigned specific accounts receivable
totaling P5,000,000 as collateral on a P4,000,000, 12% note from certain bank.
The entity will continue to collect the assigned accounts receivable. In addition to
the interest on the note, the bank also charged a 5% finance fee deducted in
advance on the assigned accounts. The December collections of assigned
accounts receivable amounted to P2,000,000 less cash discount of P200,000.
On December 31, 2020, the entity remitted the collections to the bank in
payment for the interest accrued on December 31, 2020 and the note payable.
The entity accepted sales returns of P100,000 on the assigned accounts and
wrote off assigned accounts of P300,00O. Compute for the amount of cash
received from the assignment of accounts receivable on December 1, 2020. *
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