On December 1, 2020 LOVELY Company assigned on a non-notification basis accounts receivable of P10,000,000 to a bank in consideration for a loan of 80% of the accounts less a 5% service fee on the accounts assigned. LOVELY signed a note for the bank loan. On December 31, 2020, LOVELY collected assigned accounts of P6,000,000 less discount of P300,000. LOVELY remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. What amount should LOVELY report as note payable as a current liability in its December 31, 2020 Statement of Financial Position?

On December 1, 2020 LOVELY Company assigned on a non-notification basis accounts receivable of P10,000,000 to a bank in consideration for a loan of 80% of the accounts less a 5% service fee on the accounts assigned. LOVELY signed a note for the bank loan. On December 31, 2020, LOVELY collected assigned accounts of P6,000,000 less discount of P300,000. LOVELY remitted the collections to the bank in partial payment for the loan. The bank applied first the collection to the interest and the balance to the principal. The agreed interest is 1% per month on the loan balance. What amount should LOVELY report as note payable as a current liability in its December 31, 2020 Statement of Financial Position?

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 11RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

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