Aye Company factored P600,000 of its accounts receivable to Sweet Company on October 1. Control was surrendered by Aye Company. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. (Use 365 days in the computation of interest). Questions: 1. What is the amount of cash initially received by Aye Company from the factoring?Answer 2. If all accounts are collected, what is the cost of factoring the accounts receivable?

Aye Company factored P600,000 of its accounts receivable to Sweet Company on October 1. Control was surrendered by Aye Company. The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. (Use 365 days in the computation of interest). Questions: 1. What is the amount of cash initially received by Aye Company from the factoring?Answer 2. If all accounts are collected, what is the cost of factoring the accounts receivable?

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.
Lea Company factored P 5,000,000 of accounts receivable. Control was surrendered by the entity. The finance company assessed of 2% and retains a hold back 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 30days? 1. 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 2. What total amount should be recognized as loss on factoring? a. 299,315 b. 799,315 c. 250,000 d. 0
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John's entity assigned P700,000 of accounts receivable to a bank under a nonnotification arrangement. The bank advances 80% less a service charge of P5,000. The entity signed a promissory note that provides for interest of 1% per month on the unpaid loan balance. The entry to record the assignment of accounts receivable will include a a. No entry needed b. Debit to accounts receivable-assigned, P700,000 c. Debit to accounts receivable-assigned, P555,000 d. Debit to accounts receivable-assigned, P560,000 e. Cannot determine
Company factored P6,000,000 of accounts receivable to a certain bank at the end of current year. Control was surrendered by Uranus. The factor-bank assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable. In addition, the factor-bank charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days (use 365 days). What is the amount of cash initially received from factoring?
XYZ Company factored P6,000,000 of accounts receivable to ABC Company on October 1, 2006. Control was surrendered by XYZ. ABC accepted the receivables subject to recourse for nonpayment. ABC assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, ABC charged 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 of a. 5,296,850 b. 5,386,850 c. 5,476,850 d. 5,556,850 5. Assuming all receivables are collected, XYZ Company's cost of factoring the receivables would be c. 433,150 а. 313,150 b. 180,000 d. 613,150
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Greenyard Corp. factored P200,000 accounts receivable to Provider Financing Corp. on a without recourse basis on July 1, 2021. Provider charged a 5% service fee and retained a 10% holdback to cover expected sales returns. In addition, Provider charged 10% interest computed on a weighted average time to maturity of the receivables of 73 days over 365 days. How much net proceeds is received from the factoring on July 1, 2021? Answer: