4 Indicate the classification, presentation and disclosure ofProblem 8-12 (IAA)Lucid Company showed the following balances on December31:Accounts receivable-unassignedAccounts receivable-assignedAllowance for doubtful accounts-January 1Receivable from factorNote payable-bank1,000,000300,00030,00040,000240,000During the current year, the entity found itself in financialdistress and decided to resort to receivable financing.On June 30, the entity factored P200,000 of accountsreceivable to a finance entity.The finance entity charged a factoring fee of 5% of theaccounts factored and withheld 20% of the amount factored.On December 31, the entity assigned P300,000 of accountsreceivable to a bank under a nonnotification basis.The bank advanced 80% less a service fee of 5% of the accountsassigned. The entity signed a promissory note for the loan.On December 31, it is estimated that 5% of the outstandingaccounts receivable may prove uncollectible.Required:the accounts receivable involved in receivable financing.243

Receivables: The amount of money to be received within the operating cycle of the company is known…

Answered: Required: 4. Indicate the…

Required: 4. Indicate the classification, presentation and disclosure of the accounts receivable involved in receivable financing.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...

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Concept explainers

Bad Debts

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.

Question

4 Indicate the classification, presentation and disclosure of
Problem 8-12 (IAA)
Lucid Company showed the following balances on December
31:
Accounts receivable-unassigned
Accounts receivable-assigned
Allowance for doubtful accounts-January 1
Receivable from factor
Note payable-bank
1,000,000
300,000
30,000
40,000
240,000
During the current year, the entity found itself in financial
distress and decided to resort to receivable financing.
On June 30, the entity factored P200,000 of accounts
receivable to a finance entity.
The finance entity charged a factoring fee of 5% of the
accounts factored and withheld 20% of the amount factored.
On December 31, the entity assigned P300,000 of accounts
receivable to a bank under a nonnotification basis.
The bank advanced 80% less a service fee of 5% of the accounts
assigned. The entity signed a promissory note for the loan.
On December 31, it is estimated that 5% of the outstanding
accounts receivable may prove uncollectible.
Required:
the accounts receivable involved in receivable financing.
243

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