On December 1, 2020, Lush Soma Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from BNP bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest of the note, the bank also charged a 5% finance fee deducted in advance of the assigned accounts. The December collection of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the Company remitted the collections on the bank in payment for the interest earned on December 31, 2020 and the note payable. The entity accepted sales returns of 100,000 on the assigned notes and wrote off assigned accounts of 30,000. 1.What amount of cash received from the assignment of accounts receivable? 2.What is the carrying amount of note payable on December 31, 2020? 3.What amount should be disclosed as equity of assigned accounts as of December 31, 2020?
On December 1, 2020, Lush Soma Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from BNP bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest of the note, the bank also charged a 5% finance fee deducted in advance of the assigned accounts. The December collection of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the Company remitted the collections on the bank in payment for the interest earned on December 31, 2020 and the note payable. The entity accepted sales returns of 100,000 on the assigned notes and wrote off assigned accounts of 30,000. 1.What amount of cash received from the assignment of accounts receivable? 2.What is the carrying amount of note payable on December 31, 2020? 3.What amount should be disclosed as equity of assigned accounts as of December 31, 2020?
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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On December 1, 2020, Lush Soma Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from BNP bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest of the note, the bank also charged a 5% finance fee deducted in advance of the assigned accounts. The December collection of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the Company remitted the collections on the bank in payment for the interest earned on December 31, 2020 and the note payable. The entity accepted sales returns of 100,000 on the assigned notes and wrote off assigned accounts of 30,000.
1.What amount of cash received from the assignment of accounts receivable?
2.What is the carrying amount of note payable on December 31, 2020?
3.What amount should be disclosed as equity of assigned accounts as of December 31, 2020?
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