PLKO Co. factored P160,000 accounts receivable to NCD Financing Corp on a with recourse basis on January 1, 2018. NCD charged a 4% service fee and retained a 10% holdback to cover expected sales returns. In addition, NCD charged 12% interest computed on a weighted average time to maturity of the receivables of 73 days over 365 days. PLKO Co. determines that the recourse obligation has a fair value of P3,000. How much is the loss on sale of receivables recognized on January 1, 2018 assuming the factoring was made on a casual basis?

PLKO Co. factored P160,000 accounts receivable to NCD Financing Corp on a with recourse basis on January 1, 2018. NCD charged a 4% service fee and retained a 10% holdback to cover expected sales returns. In addition, NCD charged 12% interest computed on a weighted average time to maturity of the receivables of 73 days over 365 days. PLKO Co. determines that the recourse obligation has a fair value of P3,000. How much is the loss on sale of receivables recognized on January 1, 2018 assuming the factoring was made on a casual basis?

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

PLKO Co. factored P160,000 accounts receivable to NCD Financing Corp on a with recourse basis on
January 1, 2018. NCD charged a 4% service fee and retained a 10% holdback to cover expected sales
returns, In addition, NCD charged 12% interest computed on a weighted average time to maturity of the
receivables of 73 days over 365 days. PLKO Co. determines that the recourse obligation has a fair
value of P3,000. How much is the loss on sale of receivables recognized on January 1, 2018 assuming
the factoring was made on a casual basis?

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