Problem 8-14 (IAA) December 1, 2020, Solvent Company assigned specifie accounts receivable totaling P5,000,000 as collateral on a P4.000,000 12% note from a certain bank. The entity will continue to collect the assigned accounts receivable, addition to the interest on the note, the bank alao charged 5% finance fee deducted in advance on the assigned accounts. The December collections of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2020 and the note payable. The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned accounts of P300,000. 1. What amount of cash was received from the assignment of accounts receivable on December 1, 2020? a. 4,000,000 b. 3,800,000 c. 4,750,000 d. 3,750,000 2. What is the carrying amount of note payable on December 31, 2020? a. 1,840,000 b. 2,140,000 c. 2,240,000 d. 2,200,000 3. What amount should be disclosed as the equity of Solvent Company in assigned accounts on December 31, 2020? a. 260,000 b. 400,000 c. 360,000 d. 760,000

Problem 8-14 (IAA) December 1, 2020, Solvent Company assigned specifie accounts receivable totaling P5,000,000 as collateral on a P4.000,000 12% note from a certain bank. The entity will continue to collect the assigned accounts receivable, addition to the interest on the note, the bank alao charged 5% finance fee deducted in advance on the assigned accounts. The December collections of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2020 and the note payable. The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned accounts of P300,000. 1. What amount of cash was received from the assignment of accounts receivable on December 1, 2020? a. 4,000,000 b. 3,800,000 c. 4,750,000 d. 3,750,000 2. What is the carrying amount of note payable on December 31, 2020? a. 1,840,000 b. 2,140,000 c. 2,240,000 d. 2,200,000 3. What amount should be disclosed as the equity of Solvent Company in assigned accounts on December 31, 2020? a. 260,000 b. 400,000 c. 360,000 d. 760,000

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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