On October 31, 2021, Butter Company engaged in the following transactions: 1. Obtained a Php500,000, six month loan from Dope Bank, discounted at 12%. The company pledged Php500,000 of accounts receivable as security for the loan. 2. Factored Php1,000,000 of accounts receivable without recourse on a non notification basis with DNA Company. DNA charged a factoring fee of 2% of the amount of receivables factored and withheld 10% of the amount factored. >What is the total amount of cash received from the financing of the receivables? >What is the amount of cash received from the pledged accounts receivables?
On October 31, 2021, Butter Company engaged in the following transactions: 1. Obtained a Php500,000, six month loan from Dope Bank, discounted at 12%. The company pledged Php500,000 of accounts receivable as security for the loan. 2. Factored Php1,000,000 of accounts receivable without recourse on a non notification basis with DNA Company. DNA charged a factoring fee of 2% of the amount of receivables factored and withheld 10% of the amount factored. >What is the total amount of cash received from the financing of the receivables? >What is the amount of cash received from the pledged accounts receivables?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On October 31, 2021, Butter Company engaged in the following transactions: 1. Obtained a Php500,000, six month loan from Dope Bank, discounted at 12%. The company pledged Php500,000 of accounts receivable as security for the loan. 2. Factored Php1,000,000 of accounts receivable without recourse on a non notification basis with DNA Company. DNA charged a factoring fee of 2% of the amount of receivables factored and withheld 10% of the amount factored.
>What is the total amount of cash received from the financing of the receivables?
>What is the amount of cash received from the pledged accounts receivables?
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