Practical Accounting Problem by Mr. Valix

RECEIVABLE FINANCING

1. On December 1, 2011, Bamboo Company assigned specific accounts receivable totaling P2,000,000 as collateral on a P1,500,000, 12% note from a certain bank. Bamboo Company will continue to collect the assigne accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted in advance on the P1,500,000 value of the note. The December collections of assigned accounts receivable amounted to P1,000,000 less cash discounts of P50,000. On December 31, 2011, Bamboo Company remitted the collections to the bank in payment for the interest accrued on December 31, 2011 and the note payable

1. What amount of cash was received from the assignment of accounts receivable on December 1, 2011?

a. 2,000,000

b. 1,500,000

c. 1,900,000

d.1,425,000

2. What is the carrying amount of note payable on December 31, 2011?

a. 500,000

b. 550,000

c. 565,000

d. 730,000

3. What amount shoul be disclosed as the equity of Bamboo Company in assigned accounts on December 31, 2011?

a. 500,000

b. 450,000

c. 435,000

d. 270,000

2. Zeus Company factored P 600,000 of accounts receivable to a finance entity on October 1, 2011. Control was surrendered by Zeus Company. The factor assessed a fee of 3% and retains 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.

1.What is the amount of cash initially received by Zeus Company from the factoring?

a. 5,296,850

b. 5,386,850

c. 5,476,850

d. 5,556,850

2. If all accounts are collected, what is the cost of factoring the accounts receivable?

a. 313.150

b. 180,000

c. 433,150

d. 613,150

3. Camia Company sold accounts receivable without recourse for P5,300,000. Camia received P 5,000,000 cash immediately from the factor. The remaining P 300,000 will be received once the factor verifies that none of the accounts receivable is in dispute. The...