Otter Company has a receivable amounting to P1,200,000; Otter had previouslyestablished an Allowance for bad debts of P50,000 in connection with thesereceivables.Otter Company sold these receivables with recourse for P1,060,000. Otter receivedP1,000,000 cash immediately from the factor. The remaining P60,000 will bereceived once the factor verifies that none of the receivables is in dispute. Controlwas surrendered by Otter. The fair value of the recourse obligation is P26,000.The loss on factoring to be recognized by Otter Company is

Net realizable value of receivables = Beginning receivable - Beginning Allowance for bad debts =…

Answered: Otter Company has a receivable…

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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Mountain High Ice Cream Company transferred $64.000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5.400). Mountain High anticipates a $3.400 recourse obligation. The bank charges a 2% fee (2% of $64.000), and requires that amount to be paid at the start of the factoring arrangement. Required: Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
ABC Company has an outstanding receivable of P1,000,000 as of December 31, 2020. A test of collectability of the receivable showed that P700,000 is currently collectible and not impaired; P300,000 has been outstanding more than the required period for similar transaction and objective evidence showed that only P150,000 is considered realizable; the remaining receivable balance has been outstanding for 2 years and the company estimates that none of which will be realized. What amount should the account receivable is reported in the December 31, 2020 balance sheet? A. P700,000 B. P850,000 C. P800,000 D. P758,000
Alpha Gym allows services to be on account to loyal customers. The unadjusted Accounts Receivable at the end of the year amounts to ₱120,000 and unadjusted Allowance for doubtful accounts amounts to ₱ 5,000. Service revenue for the year amounted to ₱ 1,250,000. If Alpha Gym estimates 2% of revenue as bad debts, what is the net realizable value of the receivables which should be presented in the statement of financial position?
es Mountain High Ice Cream Company reports under IFRS. Mountain High transferred $64,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 80% of the factored amount to Mountain High and retains 20% to cover sales returns and allowances. When the bank collects the receivables, It will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,400). Mountain High anticipates a $3,400 recourse obligation. The bank charges a 1% fee (1% of $64,000), and requires that amount to be paid at the start of the factoring arrangement. Mountain High has transferred control over the receivables, but determines that it still retains substantially all risks and rewards associated with them. Required: Prepare the Journal entry to record the transfer on the books of Mountain High, considering whether the sale criteria under IFRS have been met Note: If no entry is required for a transaction/event, select "No Journal…
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? *
On December 31, 2021, Empoy Company has overdue notes payable of P5,000,000 with accrued interest of P500,000. The company is threatened with a court suit if it would not settle its debt. The company entered into an agreement with the creditor to transfer real estate carried in the books of Empoy at P3million. The real estate has a current fair market value of P4.5million. What was the total amount of gain reported by Empoy as a result of debt restructuring/ a.) 2,500,000 b.) 1,500,000 c.) 1,000,000 d.) 500,000
Alpesh bhaliya
On December 31, 2021, Empoy Company has overdue notes payable of P5,000,000 with accrued interest of P500,000. The company is threatened with a court suit if it would not settle its debt. The company entered into an agreement with the creditor to transfer real estate carried in the books of Empoy at P3million. The real estate has a current fair market value of P4.5million. What was the total amount of gain reported by Empoy as a result of debt restructuring? 2,500,000 1,500,000 1,000,000 500,000
Otter company has a receivable amounting to P1,200,000 otter had previously established an allowance for bad debts of 50,000 in connection with these receivables.otter company sold these receivables with recourse for P1,060,000. Otter received P1,000,000 cash immediately from the factor. the remaining P60,000 will be received once the factor verifies that none of the receivables is in dispute. control was surrendered by Otter. the fair value of the recourse obligation is P26,000The loss on factoring to be recognized by Otter Company is?
Wraith Inc. factored without recourse its accounts receivable amounting to P100,000. Wraith received P82,000 as cash advance from the bank and the bank withheld 3,000 as contingency for uncollectible accounts. The bank charged Wraith P15,000 as finance service fee for factoring. How much is the loss on factoring from the transaction? a. Zero b. 10,000 c. 15,000 d. 20,000
Logitech Corporation transferred $100,000 of accounts receivable to a local bank. The transfer was made without recourse. The local bank remits 85% of the factored amount to Logitech and retains the remaining 15%. When the bank collects the receivables, it will remit to Logitech the retained amount less a fee equal to 3% of the total amount factored. Logitech estimates a fair value of its 15% interest in the receivables of $11,000 (not including the 3% fee). What is the effect of this transaction on the company’s assets, liabilities, and income before income taxes?
On January 1, 2023, Karen Hong lent $64612 to Ben Bachu. A zero-interest-bearing note (face amount, $86000) was exchanged solely for cash; no other rights or privileges were exchanged. The note is to be repaid on December 31, 2025. The market rate of interest for a loan of this type is 10%. To the nearest dollar, and using the effective interest method, how much interest revenue should Ms. Hong recognize in 2023? $19383 $6461 $25800 ○ $8600

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