PURE Corporation needed cash to meet current operating needs. PURE factored some P6,000,000 of accounts receivable to HSBC. An allowance for doubtful accounts of 10% of the receivable balance is maintained by PURE. The bank withheld 10% of the purchase price as protection against sales returns and allowances and charged a commission fee of 15% on the gross accounts receivable balance. Sales returns against the factored receivables during the collection period totaled P200,000. How much was recognized as a loss from the sale of PURE's receivables to HSBC?

PURE Corporation needed cash to meet current operating needs. PURE factored some P6,000,000 of accounts receivable to HSBC. An allowance for doubtful accounts of 10% of the receivable balance is maintained by PURE. The bank withheld 10% of the purchase price as protection against sales returns and allowances and charged a commission fee of 15% on the gross accounts receivable balance. Sales returns against the factored receivables during the collection period totaled P200,000. How much was recognized as a loss from the sale of PURE's receivables to HSBC?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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