The entity sold P1,500,000 of accounts receivable for cash proceeds of P1,390,000. No bad debt allowance was associated with these accounts. On December 15, 2020, the entity assigned the remainder of the accounts receivable, P5,000,000 as of that date, as collateral on a P2,500,000, 12% annual interest rate loan.   The entity received P2,500,000 less a 2% finance charge. None of the assigned accounts has been collected by the end of the year.   Allowance for bad debts before adjustment, 12/31/2020                                          100,000 Estimated uncollectible, 12/31/2020                                                      10% of accounts receivable Accounts receivable not including factored and assigned accounts                               1,000,000 Accounts receivable – assigned                                                                       5,000,000 Accounts receivable – factored                                                                        1,500,000   28. What is the total amount of cash received from the financing of accounts receivable during the year? P1,390,000 P3,890,000 P3,540,000 P3,840,000   29. What total amount of accounts receivable should be reported as current assets on December 31, 2020? P1,000,000 P6,000,000 P5,000,000 P7,500,000   30. What is the bad debts expense for the current year? P500,000 P600,000 P650,000 P750,000

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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...
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The entity sold P1,500,000 of accounts receivable for cash proceeds of P1,390,000. No bad debt allowance was associated with these accounts. On December 15, 2020, the entity assigned the remainder of the accounts receivable, P5,000,000 as of that date, as collateral on a P2,500,000, 12% annual interest rate loan.

 

The entity received P2,500,000 less a 2% finance charge. None of the assigned accounts has been collected by the end of the year.

 

Allowance for bad debts before adjustment, 12/31/2020                                          100,000

Estimated uncollectible, 12/31/2020                                                      10% of accounts receivable

Accounts receivable not including factored and assigned accounts                               1,000,000

Accounts receivable – assigned                                                                       5,000,000

Accounts receivable – factored                                                                        1,500,000

 

  1. 28. What is the total amount of cash received from the financing of accounts receivable during the year?
  2. P1,390,000
  3. P3,890,000
  4. P3,540,000
  5. P3,840,000

 

  1. 29. What total amount of accounts receivable should be reported as current assets on December 31, 2020?
  2. P1,000,000
  3. P6,000,000
  4. P5,000,000
  5. P7,500,000

 

  1. 30. What is the bad debts expense for the current year?
  2. P500,000
  3. P600,000
  4. P650,000
  5. P750,000
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