On March 1, 20x1, ABC assigned its P4,000,000 accounts receivable to XYZ Bank in exchange for a 2-month, 12% loan equal to 75% of the assigned receivables. ABC received the loan proceeds after a 2% deduction for service fee based on the assigned notes. During March, P2,500,000 were collected from the receivables. Sales returns and discounts amounted to P50,000. By the end of March, equity on assigned accounts shall be The correct answer is: 950,000
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
2. On March 1, 20x1, ABC assigned its P4,000,000
The correct answer is: 950,000
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