On its second year of operations, POP Co. thought of expanding its business. In order to generate additional cash necessary for this expansion, the company, on September 1, 2021, factored P500, 000 of accounts receivable to COLA Finance Company. Factoring fee was 10% of the receivables purchased. The COLA Finance Co. withheld 6% of the purchase price as protection against sales returns and allowances. On November 1, 2021, accounts receivable amounting to P1, 500, 000 was assigned to City Bank as collateral on P900, 000, 20% annual interest rate of loan. A 4% finance charge was deducted in advance. Other data as of December 31, 2020 relating to accounts receivable follows: Sales all on account during the year P5, 000, 000 Sales return and allowances 150, 000 Accounts written off on assigned receivables 50, 000 Accounts receivables, January 1, 2021 800, 000 Allowance for bad debts- unadjusted (credit) 16, 750 Estimated uncollectible 2% of accounts receivables Collections of Receivables: On Unassigned receivables 3, 000, 000 On assigned receivables 500, 000 Refer to POP Company, the total cash generated from factoring and assigning the accounts receivables was a. P1, 254, 000 c. P1, 334, 000 b. P 1, 284, 000 d. P1, 620, 000 Refer to POP Company, what is the amount of bad debts to be reported in the 2021 income statement? a. P35, 250 c. P55, 250 b. P45, 250 d. P65, 250
On its second year of operations, POP Co. thought of expanding its business. In order to generate additional cash necessary
for this expansion, the company, on September 1, 2021, factored P500, 000 of accounts receivable to COLA Finance
Company. Factoring fee was 10% of the receivables purchased. The COLA Finance Co. withheld 6% of the purchase price as
protection against sales returns and allowances. On November 1, 2021, accounts receivable amounting to P1, 500, 000 was
assigned to City Bank as collateral on P900, 000, 20% annual interest rate of loan. A 4% finance charge was deducted in
advance.
Other data as of December 31, 2020 relating to accounts receivable follows:
Sales all on account during the year P5, 000, 000
Sales return and allowances 150, 000
Accounts written off on assigned receivables 50, 000
Accounts receivables, January 1, 2021 800, 000
Allowance for
Estimated uncollectible 2% of accounts receivables
Collections of Receivables:
On Unassigned receivables 3, 000, 000
On assigned receivables 500, 000
Refer to POP Company, the total cash generated from factoring and assigning the accounts receivables was
a. P1, 254, 000 c. P1, 334, 000
b. P 1, 284, 000 d. P1, 620, 000
Refer to POP Company, what is the amount of bad debts to be reported in the 2021 income statement?
a. P35, 250 c. P55, 250
b. P45, 250 d. P65, 250
Step by step
Solved in 3 steps
