PLKO Co. factored P160,000 accounts receivable to NCD Financing Corp on a with recourse basis on January 1, 2018. NCD charged a 4% service fee and retained a 10% holdback to cover expected sales returns. In addition, NCD charged 12% interest computed on a weighted average time to maturity of the receivables of 73 days over 365 days. PLKO Co. determines that the recourse obligation has a fair value of P3,000. How much is the loss on sale of receivables recognized on January 1, 2018 assuming the factoring was made on a casual basis?

PLKO Co. factored P160,000 accounts receivable to NCD Financing Corp on a with recourse basis on January 1, 2018. NCD charged a 4% service fee and retained a 10% holdback to cover expected sales returns. In addition, NCD charged 12% interest computed on a weighted average time to maturity of the receivables of 73 days over 365 days. PLKO Co. determines that the recourse obligation has a fair value of P3,000. How much is the loss on sale of receivables recognized on January 1, 2018 assuming the factoring was made on a casual basis?

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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Black Corporation has entered into a long-term assignment agreement with a finance company. Under the terms of this agreement, Black receives 80% of the value of all accounts assigned and is charged a 1% service charge which is based upon the actual peso amount of cash received. Additionally, the finance company charges Black 12% annual interest on the outstanding loan. The following selected transactions relate to this agreement: December 1, 2014 - Accounts receivable of P175,000 are assigned. December 11, 2014 - A sales return of P1,000 on an assigned account is allowed by Black. December 31, 2014 - Collections are made on P86,000 of assigned accounts. This amount and 1 month's interest on the outstanding loan are remitted to the finance company. (For simplicity, compute interest to the nearest month). January 29, 2016 - P60,000 of assigned accounts are collected and the remainder of the loan is repaid. 1. What is the journal entry to record the December 1, 2014 loan? 2. What…