FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Black Corporation has entered into a long-term assignment agreement with a finance company. Under the terms of this agreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual interest on the outstanding loan. The following selected transactions relate to this agreement:
December 1, 20X5 -
December 11, 20X5 - A sales return of P1,000 on an assigned account is allowed by Black.
December 31, 20X5 - Collections are made on P86,000 of assigned accounts. This amount and 1 month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the nearest month).
January 29, 20X7 - P60,000 of assigned accounts are collected and the remainder of the loan is repaid.
Required:
1. Prepare
2. How would this assignment agreement be reported on Black's December 31, 20X5
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