Levi Corporation factored P600,000 of accounts receivable to Lantaca Finance Co. Control was surrendered by Levi. Lantaca accepted the receivables subject to recourse for nonpayment. Lantaca assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, Lantaca 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 P9,000. 22. The loss on factoring to be recognized by Levi Corporation is

Levi Corporation factored P600,000 of accounts receivable to Lantaca Finance Co. Control was surrendered by Levi. Lantaca accepted the receivables subject to recourse for nonpayment. Lantaca assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In addition, Lantaca 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 P9,000. 22. The loss on factoring to be recognized by Levi Corporation is

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 June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.
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.
Seller Corp. factored P400,000 of accounts receivable with Buyer, Inc., on a without-recourse basis. The factor charge was 1.75% of the amount of receivables, and an additional 4% was retained to cover probable adjustments. In addition to the factor charge, a finance charge was withheld equal to 12% annually for any amounts advanced prior to the due dates of the receivables. This charge was based on 100% of the face value. The average credit term was 30 days from the date of transfer. According to the terms of the factoring agreement, Seller was to handle returned goods, allowances, and shipping disputes. Buyer was to collect the cash and acknowledge sales discounts, but such discounts were to be charged to Seller. Credit losses were to be absorbed by Buyer. Seller has not recorded any bad debt expense related to the factored. receivables. The following transactions pertain to this factoring arrangement: Aug. 1 The receivable records were transferred to Buyer. 31 Buyer…
Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10% to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,000). Mountain High anticipates a $3,000 recourse obligation. The bank charges a 2% fee (2% of $60,000), and requires that amount to be paid at the start of the factoring arrangement.Required:Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Mountain High Ice Cream Company transferred $60,000 of accounts receivable to the Prudential Bank. The transfer was made with recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%to cover sales returns and allowances. When the bank collects the receivables, it will remit to Mountain Highthe retained amount (which Mountain estimates has a fair value of $5,000). Mountain High anticipates a $3,000recourse obligation. The bank charges a 2% fee (2% of $60,000), and requires that amount to be paid at the startof the factoring arrangement.Required:Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Maxwell Corporation factored, with recourse, $200,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. Maxwell estimates the recourse obligation at $4,800. What amount should Maxwell report as a loss on sale of receivables?
Furman Corporation entered into an assignment agreement with a finance company whereby Furman would be advanced 80% of all accounts assigned, minus a $2,000 service charge. The assignment does not meet the conditions for a sale and should be accounted for as a secured borrowing. During the year, $300,000 of accounts receivable were assigned, $220,000 collections were made on outstanding assigned accounts, and $210,000 was remitted to the finance company. This remittance included interest charges of $2,100. Sales returns and allowances on assigned accounts amounted to $5,000. Required: 1. Prepare the journal entries necessary to record the preceding information. 2. Show how the preceding information would be reported on Furman’s year-end balance sheet (assume the note payable is short-term).
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Sakuragi Corporation engaged in the following transactions with regards to financing of receivable during 2021:· On February 1, Sakuragi company factored receivables with a face amount of P300,000 BPI. BPI assessed a factoring fee of 3% of the receivables and retains 5% of the receivables factored. The factoring was done on a without recourse basis, thus transferring all significant risks and rewards related to the receivables to BPI.· On October 1,2021, Sakuragi discounted one year 10% P40,000 interest-bearing notes receivable that will mature on December 31,2021 to Mitsui Bank without recourse. The bank’s discount rate was 15%.· Obtained a P500,000, 6 month, 15% loan from Citibank on November 1, 2021. The company pledge P600,000 of accounts receivable as security for the loan. Sakuragi received the loan less the total interest in advance and a 2% of the loaned amount as service charge.How much is the total cash received from the financing of accounts receivables?…
Oreo Company factored P5,000,000 of accounts receivable to ABC Company on July 1, 2020. Control was surrendered by Oreo. ABC assessed a fee of 5% and retains a holdback equal to 20% of the accounts receivable. In addition ABC charged 12% computed on a weighted average time to maturity of the receivables of 30 days. 1. Oreo Company will receive and record cash of 3,700,685 2. Assuming all receivables are collected, Oreo Company’s cost of factoring the receivables would be 299,315 There are already answers, I just need the solutions. Thank you!