Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable . After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency? A. $5,000 B. $5,050 C. $20,000 D. $19,950
Orion Rentals is unable to collect on a note worth $25,000 and has accumulated interest of $250. It convert this note and interest to accounts receivable. After some time, Orion is still unable to collect the debt and it decides to sell the converted note to a collection agency. The collection agency will pay only 20% of the value of accounts receivable to Orion. What is the amount of cash paid to Orion from the collection agency?
A. $5,000
B. $5,050
C. $20,000
D. $19,950
Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.
Inder Corporation is experiencing a temporary cash shortage and decides to transfer a group of its accounts receivable to Newton Company on March 22. Inder does not normally transfer its receivables. Newton accepts $110,000 of Inder’s accounts receivable, remits 80% of the accounts receivable transferred, and charges a 16% commission on the gross amount of the transferred receivables. Title to the receivables is transferred to Newton, and Newton has the right to assign, pledge, or sell the receivables. During the period, sales returns and allowances on transferred accounts amounted to $1,000.
Required:
1.
Prepare all the journal entries necessary by Inder to record the preceding information assuming the transfer was without recourse.
2.
Prepare all the journal entries necessary by Inder to record the preceding information assuming the transfer was with recourse and the recourse obligation had an estimated fair value of $5,600.
3.
Assume that Inder uses IFRS. How would…
Lazard Corporation has experienced cash flow problems and decides to improve its current cash position by factoring 30% of its receivables, without recourse, and assigning the remainder with the same finance company. The factored receivables meet the conditions for a sale while the assigned receivables do not. The agreement with the finance company stipulates that a 10% commission will be assessed on factored accounts, no service charge is assessed on the assigned accounts, and 15% annual interest will be charged on the outstanding note payable balance related to the assigned accounts. Additionally, the finance company will advance only 80% of the factored and assigned accounts, and Lazard must continue the collection responsibilities on the assigned accounts. At the beginning of the last month of the company’s fiscal year, the accounts receivable transferred to the finance company amounted to $187,000. During the month, collections on factored accounts were $46,000, and collections on…
Otter company has a receivable amounting to P1,200,000 otter had previously established an allowance for bad debts of 50,000 in connection with these receivables.otter company sold these receivables with recourse for P1,060,000. Otter received P1,000,000 cash immediately from the factor. the remaining P60,000 will be received once the factor verifies that none of the receivables is in dispute. control was surrendered by Otter. the fair value of the recourse obligation is P26,000The loss on factoring to be recognized by Otter Company is?
Construction Accounting And Financial Management (4th Edition)
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7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY