XYZ Company factored P6,000,000 of accounts receivable to ABC Company on October 1, 2006. Controlwas surrendered by XYZ. ABC accepted the receivables subject to recourse for nonpayment. ABCassessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, ABCcharged 15% interest computed on a weighted-average time to maturity of the receivables of 54 days.The fair value of the recourse obligation is P90,000.4. XYZ will receive and record cash ofa. 5,296,850 b. 5,386,850c. 5,476,850d. 5,556,8505. Assuming all receivables are collected, XYZ Company's cost of factoring the receivables would bec. 433,150а. 313,150b. 180,000d. 613,150

Debtor days is that the average range of days needed for a corporation to receive payments from its…

Answered: XYZ Company fact

Business

Accounting

XYZ Company fact

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 10RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

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On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to McLaughlin Company for cash. McLaughlin Company charges a 750 service fee, advances 85% of Jordans accounts receivable, and charges an annual interest rate of 9% on any outstanding loan balance. Prepare the related journal entries for Jordan.
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