On its second year of operations, BBQ Co. thought of expanding its business. In order to generate additional cash necessary for this expansion, the company on September 1, factored P400,000 of accounts receivable to Lechon Financing Co. Factoring fee was 5% of the receivables purchased. The finance company withheld 2% of the purchase price as protection against sales returns and allowances. On November 2, accounts receivable amounting to P500,000 was assigned to Ngohiong Bank as collateral on P300,000, 10% annual interest rate loan. A 3% finance charge was deducted in advance. The total cash generated from factoring and assigning the accounts receivable was OP663,400 P633,400 P657,400 P663,000

On its second year of operations, BBQ Co. thought of expanding its business. In order to generate additional cash necessary for this expansion, the company on September 1, factored P400,000 of accounts receivable to Lechon Financing Co. Factoring fee was 5% of the receivables purchased. The finance company withheld 2% of the purchase price as protection against sales returns and allowances. On November 2, accounts receivable amounting to P500,000 was assigned to Ngohiong Bank as collateral on P300,000, 10% annual interest rate loan. A 3% finance charge was deducted in advance. The total cash generated from factoring and assigning the accounts receivable was OP663,400 P633,400 P657,400 P663,000

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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