payments to clients at the end of each month so that the balance in the retainer is equal to  10% of unpaid receivables at the end of the month. Cabanes recognizes its 15% commissions  as revenue at the time the receivables are factored. Also, experience has led Cabanes to  establish allowance for bad debts of 4% of all receivables purchased. On January 2, 2021,  Cabanes purchased receivables from Cabana Company totaling P3,000,000. Cabana has  previously established an allowance for bad debts for these receivables of P100,000. By January  31, Cabanes had collec

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem 29 

Cabanes Factors provides financing to other companies by purchasing their accounts receivable  on a non-recourse basis. Cabanes charges a commission to its clients of 15% of all receivables  factored. In addition, Cabanes withholds 10% of receivables factored for protection against  sales returns or adjustments. Cabanes credits the 10% withheld to Client Retainer and makes  payments to clients at the end of each month so that the balance in the retainer is equal to  10% of unpaid receivables at the end of the month. Cabanes recognizes its 15% commissions  as revenue at the time the receivables are factored. Also, experience has led Cabanes to  establish allowance for bad debts of 4% of all receivables purchased. On January 2, 2021,  Cabanes purchased receivables from Cabana Company totaling P3,000,000. Cabana has  previously established an allowance for bad debts for these receivables of P100,000. By January  31, Cabanes had collected P2,500,000 on these receivables. 

  1.  What amount of receivable would be shown by Cabana Company relating to the  factoring transaction on January 31, 2021?
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