On February 1, 2021, MARIGOLD Company factored receivables with a carrying amount of ₱300,000 to SUNFLOWER Company. SUNFLOWER Company assesses a finance charge of 3% of the receivables and retains 5% of the receivable for possible sales returns. Relative to this transaction, you are to determine the amount of loss on sale or factoring to be reported in the income statement of MARIGOLD Company for February. Assume that MARIGOLD factors the receivables on a without recourse basis. 1. The loss to be reported is?* ₱ 24,000 ₱ 15,000 ₱ -0- ₱ 9,000 2. The amount of cash initially to be received is? * ₱ 291,000 ₱ 285,000 ₱ 300,000 ₱ 276,000
On February 1, 2021, MARIGOLD Company factored receivables with a carrying amount of ₱300,000 to SUNFLOWER Company. SUNFLOWER Company assesses a finance charge of 3% of the receivables and retains 5% of the receivable for possible sales returns. Relative to this transaction, you are to determine the amount of loss on sale or factoring to be reported in the income statement of MARIGOLD Company for February. Assume that MARIGOLD factors the receivables on a without recourse basis. 1. The loss to be reported is?* ₱ 24,000 ₱ 15,000 ₱ -0- ₱ 9,000 2. The amount of cash initially to be received is? * ₱ 291,000 ₱ 285,000 ₱ 300,000 ₱ 276,000
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 94.1C
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On February 1, 2021, MARIGOLD Company factored receivables with a carrying amount of ₱300,000 to SUNFLOWER Company. SUNFLOWER Company assesses a finance charge of 3% of the receivables and retains 5% of the receivable for possible sales returns. Relative to this transaction, you are to determine the amount of loss on sale or factoring to be reported in the income statement of MARIGOLD Company for February. Assume that MARIGOLD factors the receivables on a without recourse basis.
1. The loss to be reported is?*
₱ 24,000
₱ 15,000
₱ -0-
₱ 9,000
2. The amount of cash initially to be received is? *
₱ 291,000
₱ 285,000
₱ 300,000
₱ 276,000
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