1. Purple Company showed the following balances on December 31, 2020:Accounts receivable-unassignedAccounts receivable-assignedAllowance for doubtful accounts-January 1Receivable from factorP1,000,000300,00030,00040,000240,000Note payable-bankDuring the year 2020 Purple Company found itself in financial distress and decided toresort to receivable financing.On June 30, Purple Company factored P200,000 of its accounts receivable to a financecompany. The finance company charged a factoring fee of 5% of the accountsfactored and withheld 20% of the amount factored.On December 31, Purple Company assigned P300,000 of its accounts receivable to abank under a nonnotification basis. The bank advanced 80% less a service fee of 5% ofthe account assigned. Purple Company signed a promissory note for the loan.On December 31, it is estimated that 5% of the outstanding accounts receivable mayprove uncollectible.REQUIRED:a. Entry to record the factoring.b. Entry to record the assignment.c. Entry to adjust the allowance for doubtful accounts on December 31.

Particulars Amount Amount receivable 200,000 Cash Advance 160,000 Fees 10,000…

Answered: REQUIRED: a. Entry to record the…

REQUIRED: a. Entry to record the factoring. b. Entry to record the assignment. c. Entry to adjust the allowance for doubtful accounts on December 31.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 94.2C

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