VKS Co. assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?

VKS Co. assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 26Q: A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer...

See similar textbooks

Related questions

Q: On December 1, 2017, Kreme Company assigned on a nonnotification basis accounts receivable of…

A: A loan taken by a company by assigning its accounts receivables to the bank. This means that the…

Q: Balance Sheet (all values in £) Assets Cash Deposits with other Fls Investments (OECD gov. bonds)…

A: THE LOAN ASSET LOSS PROVISION RESULTS DUE TO NON-RECOVERIBILITY OF LOAN AMOUNT. THE POLICY HAS BEEN…

Q: Vaughn Corporation factors $275,100 of accounts receivable with Kathleen Battle Financing, Inc. on a…

A: RECOURSE FACTORING IS THE MOST COMMON AND MEANS THAT FACTOR CAN DEMAND MONEY BACK FROM THE COMPANY…

Q: Show the balance sheet after the loan is established using purchased liquidity to fund the loan.…

A: When a loan is established, it means that a borrower has been granted access to a specific amount of…

Q: riole Incorporated factored $ 146,800 of accounts receivable with Waterway Factors Inc. on a…

A: Acquisition: It is a form of business where one company acquires a stake in another company more…

Q: 1. Information from the records of Stormfall Co. is shown below. Accounts receivable - net of P6,000…

A: Solution Trade receivable are defined as the amount owed to a business by its customers following…

Q: ABC Company factored ₱3,500,000 of accounts receivable with a finance company. The factoring fee was…

A: Amount withheld = Accounts receivables x 10% = ₱3,500,000 x 10% = ₱350,000

Q: On March 1, 20x1, ABC assigned its P4,000,000 accounts receivable to XYZ Bank in exchange for a…

A: Factoring: Factoring is a type of business loan in which the business organization sells its…

Q: The Statement of Financial Position of Pedro Castro on October 1, 2015 before accepting Pablo Bunag…

A: GIVEN Pedro Castro Statement of Financial Position October 1, 2015

Q: Novak Incorporated factored $139,800 of accounts receivable with Splish Factors Inc. on a…

A: Prepare journal entry in the books of Novak Incorporation:

Q: Q1: Make all the JOURNAL entries for Atlas Inc. associated with the transfer of the accounts…

A: Following are the requisite Journal Entries

Q: At the beginning of the period, FDN Trading had a cash balance of P22,000 and a notes payable of…

A: Solution Given Opening cash balance 22000 Opening notes payable 17000 Collection…

Q: Starlight Company assigned P2,000,000 of accounts receivable as collateral for a P1,000,000 7% loan…

A: Note: Assign of accounts receivable as collateral for the loan from the bank is not considered as…

Q: On January 31, 2019, YZ Company engaged in the following transactions: * Obtained a P500,000,…

A: Amount received from loan = Loan amount - discount = P500000 - (500000 * 12% * 6/12) = P470,000

Q: ABC Company finances some of its current operations by factoring its accounts receivable to a…

A: Factoring is a process where the accounts receivable are sold by the entity to the finance company…

Q: Alpha Gym allows services to be on account to loyal customers. The unadjusted Accounts Receivable at…

A: Formula: Bad debts amount = Sales amount x percentage of bad debts amount Sales amount to be…

Q: King Burger Company provides the following information: account payable is OMR 100,000; bank…

A: The current liabilities are the short term liabilities that are to be paid off within one year.

Q: Bank Muscat reported pretax income of OMR 800,000 along with a loan loss provision of OMR 80,000 and…

A: Loan loss provision coverage ratio indicates the level of protection of the bank in respect to…

Q: The Abra Company owes P200,000 on a note payable plus P8,000 in interest to its bank. The note is…

A: The total amount of 208,000 (200000 note payable plus P8,000 in interest) includes the secured…

Q: Company factored P6,000,000 of accounts receivable to a certain bank at the end of current year.…

A: Factoring is a kind of financial transaction in which a business organization sells its accounts…

Q: On December 1, 2009, LOAN Company assigned on a non-notification basis accounts receivable of…

Q: ROK Company has a material bank overdraft of $2,000 in ABC Bank and $95,000 in XYZ bank. The bank…

A: The objective of the question is to determine how a bank overdraft should be reported in the…

Q: The following information is related to ABC Co.: 1. Accounts receivable of €60,000 (gross) are…

A: Adjusting journal entry: To record any unrecognized income or expenses for the period company made…

Q: Princess EJ Corporation factors P350,000 of accounts receivable with XYZ Financing on a with…

A: A journal entry is the process of chronicling the financial transactions in the books of the…

Q: G Hunt must be charged R1 827 interest on his overdue account. 3.3 3.4 A credit note issued to !…

A: The question is based on the concept of Financial Accounting

Q: LOL Company assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with…

A: Loss on the transfer of accounts receivables =accounts receivables assigned x finance charge %

Q: On 30 September, Emerald Travel has RM540,250 of accounts receivable. Emerald uses the allowance…

A: Solution:- 1)Preparation of journal entries to record the above selected October transactions. The…

Q: Which of the following would occur if a company factored $2,500,000 of receivables with a 2% fee?…

A: Formulas: Factoring expenses = Receivables * Fee rate

Q: How much interest expense should the company report as a result of discounting, assuming the…

A: Discounting notes is the process of selling a promissory note to a third party—typically a financial…

Q: On March 1, 20X1 ABC Co. assigned its P1,000,000 accounts receivable to B Bank in exchange for a…

A: Cash received from the assignment of accounts receivable will be calculated after deducting the…

Q: ntity A has accounts receivable of 500,000.00 and related allowance for bad debts of 120,000.00. How…

A: The allowance for doubtful account is created to record the estimated bad debt expense for the…

Q: Katok Company factored P 750,000 of accounts receivable at year end. Control was surrendered. The…

A: Factoring of Accounts Receivables: It is a financial deal in which a business sells its debtors to a…

Q: On October 31, 2021 T Company engaged in the following transactions: [1] Obtained a P500,000,…

A: S. No Particulars Amount (P) 1 Loan from BDO Total Loan obtained from BDO…

Q: At the beginning of July, MedLab Inc. assigned P2,000,000 out accounts reccivable to BPI in…

A: Sender deposits funds into recipient's account rather than remitting by debit or credit card,…

Q: During the period, FN Trading issued another promissory note for an additional loan of P74,000 and…

A: The question is based on the concept of Financial Accounting.

Q: Wood Incorporated factored €150,000 of accounts receivable with Engram Factors Inc., Without…

A: Accounts receivables means those customer accounts to whom credit sales has been made in business,…

Q: Gara Co. reported the following liabilities at December 31, 20x1: Accounts payable-trade…

A: Current liabilities: Liabilities that have to be paid within one year or one operating cycle,…

Q: Happy Inc. provided the following information: Beginning balance of Accounts receivable P5,000,000…

A: The cash basis system state that the revenue should be recorded when the actual amount of cash is…

Q: ABC Corp has the following items in its receivable and payable accounts: Due from customers,…

A: Trade Receivables are Current Assets arise from Sale of goods and rendering of services on credit or…

Q: Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million…

A: A business can use its accounts receivables asset as collateral for a loan. A loan that has a…

Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

VKS Co. assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?

Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Adobo Company assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?
54. CPA Company assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5% loan with a bank. The entity was also assessed by the bank a finance charge of 6% on the transaction and is paid up front. What amount should be recorded as a gain or loss on the transfer of accounts receivables?
Vaughn Manufacturing assigns $7300000 of its accounts receivables as collateral for a $2.64 million 9% loan with a bank. Vaughn Manufacturing also pays a finance fee of 2% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables?
LOL Company assigned P 4,000,000 of accounts receivables as collateral for a P1,500,000 5%loan with a bank. The entity was also assessed by the bank a finance charge of 6% on thetransaction and is paid up front. What amount should be recorded as a gain or loss on thetransfer of accounts receivables? A. PO B. P240,000 loss C. P100.000 gain D. P150,000 gain
Starlight Company assigned P2,000,000 of accounts receivable as collateral for a P1,000,000 7% loan with a bank. The entity also paid a finance fee of 5% on the transaction upfront. What amount should be recorded as a gain or loss on the transfer of accounts receivable? P200,000 loss P100,000 loss O P 240,000 gain
Moon Company assigned P1,500,000 of accounts receivable as collateral for a P1,000,000 loan with a bank. The bank assessed a 4% finance fee and charged interest on the note at 6% at maturity. What would be the journal entry to record the transaction?
The following information is related to ABC Co.:1. Accounts receivable of €60,000 (gross) are factored with BFO Credit without guarantee at a financing charge of 9%. Cash is received for the proceeds; collections are handled by the finance company.2. Specific accounts receivable of €45,000 (gross) are pledged to ADORO Credit. as security for a loan of €30,000 at a finance charge of 6% of the amount of the loan. The finance company will make the collections.Required:Prepare all necessary entries in general journal form for ABC Co.
1. Sunshine Inc. assigns P1,500,000 of its accounts receivables as collateral for a P1,000,000 loan with a bank. The bank assesses a 3% finance fee and charges interest on the note at 6%. The journal entry to record this transaction would not include a a. Debit to cash for P970,000 b. Debit to finance charge for P30,000 c. Credit to notes payable for P1,000,000 d. Credit to accounts receivable for P1,000,000 Numbers 2-3 Janine Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity. The finance company assessed a fee of 2% and retains a holdback equal to 10% of the accounts receivable. In addition, the finance company charged 12% interest computed on a weighted average time to maturity of the accounts receivable for 30 days? 2. What is the amount initially received from the factoring of accounts receivable? a. 4,250,000 b. 4,200,000 c. 4,700,685 d. 4,200,685 3. What total amount should be recognized as loss on factoring? a. 299,315 b. 799,315 c.…
Global Inc. assigns $3,000,000 of its accounts receivables as collateral for a $2,000,000, 8%, loan with a bank. Global Inc. also pays a finance charge of 3% of the account receivable. What would be the journal entry to record the transaction? 1,940,000 60,000 а. Cash Finance Charge Notes Payable 2,000,000 b. Cash 1,910,000 90,000 Finance Charge Accounts Receivable 2,000,000 с. Cash 1,910,000 90,000 Finance Charge Notes Payable 2,000,000 d. Cash 1,940,000 30,000 30,000 Finance Charge Due from Bank Notes Payable 2,000,000
Earth Company assigned P3,000,000 of accounts receivable as collateral for a P2,000,000 loan with a bank. The bank assessed a 4% finance fee and charged 6% interest on the note at maturity. What would be the journal entry to record the transaction?
Company B uses $800,000 of its accounts receivables as collateral when the company borrowed $5,000,000 4% loan from a bank. To obtain the loan, Company B pays a finance fee of 3% on the transaction upfront. What would be recorded as a gain (loss) on the transfer of receivables? A. $0 B. Loss of $200,000 C. Loss of $150,000 D. Loss of $800,000
On 31st August 2021, Rossy Enterprise had a RM155,000 debit balance in Accounts Receivable and a RM6,200 credit balance in Allowance for Doubtful debt. During September 2021, Rossy made the following transactions:Sept 1 : Sales on account, RM590,000.Sept 10: Collection from receivables through online banking, RM627,000.Sept 20: Write-offs of uncollectible receivables, RM7,000.Sept 30: Bad debt was estimated at 3% of the month’s credit sales.Required:1) Journalize all September transactions using the allowance method. Post the entries to Accounts Receivable, Allowance for Doubtful Debt, and Bad Debt Expense. You need to balance off the ledgers and show their balances on 30th September 2021.2) Show the amount of net accounts receivable would Rossy report in its statement of financial position as at 30 September 2021. Is the amount being realistic? Give your reason.