Problem 7: Purple Company showed the following balances on December 31, 2019: 2,000,000 (60,000) Accounts receivable Allowance for doubtful accounts The following transactions transpired during the year 2020: a. On May 1, received a P300,000, six month, 12% interest bearing note from MN, a customer, in settlement of account. b. On June 30, Purple Company factored P400,000, of its accounts receivable to a finance company. The finance company charged a factoring fee of 5% of the accounts factored and withheld 20% of the amounts factored. c. On August 1, discounted the MN note at the bank at 15%. d. On November 1, MN defaulted on the P300,000 note. Purple Company paid the bank the total amount due plus a P12,000. protest fee and other bank charges. e. On December 31, Purple Company assigned P600,000 of its accounts receivable to a bank under a non-notification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned. Purple Company signed a promissory note for the loan. f. On December 31, collected from MN in full including interest on total amount due at 12% since default date. g. On December 31, it is estimated that 5% of the outstanding accounts receivable may prove uncollectible. Based on the above data, compute the following: 16. The amount of cash received on June 30 factoring. 17. Amount of cash received on august 1 discounting. 18. Amount paid on November 1 default on the 300,000 note. 19. The amount of cash received on December 31, assignment of accounts receivable. 20. Amount of cash received on December 31, collection of the account of MN. 21. The net realizable value of the accounts receivable is
Problem 7: Purple Company showed the following balances on December 31, 2019: 2,000,000 (60,000) Accounts receivable Allowance for doubtful accounts The following transactions transpired during the year 2020: a. On May 1, received a P300,000, six month, 12% interest bearing note from MN, a customer, in settlement of account. b. On June 30, Purple Company factored P400,000, of its accounts receivable to a finance company. The finance company charged a factoring fee of 5% of the accounts factored and withheld 20% of the amounts factored. c. On August 1, discounted the MN note at the bank at 15%. d. On November 1, MN defaulted on the P300,000 note. Purple Company paid the bank the total amount due plus a P12,000. protest fee and other bank charges. e. On December 31, Purple Company assigned P600,000 of its accounts receivable to a bank under a non-notification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned. Purple Company signed a promissory note for the loan. f. On December 31, collected from MN in full including interest on total amount due at 12% since default date. g. On December 31, it is estimated that 5% of the outstanding accounts receivable may prove uncollectible. Based on the above data, compute the following: 16. The amount of cash received on June 30 factoring. 17. Amount of cash received on august 1 discounting. 18. Amount paid on November 1 default on the 300,000 note. 19. The amount of cash received on December 31, assignment of accounts receivable. 20. Amount of cash received on December 31, collection of the account of MN. 21. The net realizable value of the accounts receivable is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:Problem 7:
Purple Company showed the following balances on December 31, 2019:
2,000,000
(60,000)
Accounts receivable
Allowance for doubtful accounts
The following transactions transpired during the year 2020:
a. On May 1, received a P300,000, six month, 12% interest bearing note from MN, a customer, in
settlement of account.
b. On June 30, Purple Company factored P400,000, of its accounts receivable to a finance company. The
finance company charged a factoring fee of 5% of the accounts factored and withheld 20% of the
amounts factored.
c. On August 1, discounted the MN note at the bank at 15%.
d. On November 1, MN defaulted on the P300,000 note. Purple Company paid the bank the total amount
due plus a P12,000. protest fee and other bank charges.
e. On December 31, Purple Company assigned P600,000 of its accounts receivable to a bank under a
non-notification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned.
Purple Company signed a promissory note for the loan.
f. On December 31, collected from MN in full including interest on total amount due at 12% since default
date.
g. On December 31, it is estimated that 5% of the outstanding accounts receivable may prove
uncollectible.
Based on the above data, compute the following:
16. The amount of cash received on June 30 factoring.
17. Amount of cash received on august 1 discounting.
18. Amount paid on November 1 default on the 300,000 note.
19. The amount of cash received on December 31, assignment of accounts receivable.
20. Amount of cash received on December 31, collection of the account of MN.
21. The net realizable value of the accounts receivable is
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