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Factoring Accounts Receivable Analysis

The document details the factoring of accounts receivable worth ₱1,500,000 at 80% of their value for ₱1,200,000 in cash proceeds, recording an ₱120,000 loss on the transaction across three accounting requirements.

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Gwyneth Bajade
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5 views1 page

Factoring Accounts Receivable Analysis

The document details the factoring of accounts receivable worth ₱1,500,000 at 80% of their value for ₱1,200,000 in cash proceeds, recording an ₱120,000 loss on the transaction across three accounting requirements.

Uploaded by

Gwyneth Bajade
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Problem 3

Requirement 1
Solutions:
Accounts receivable - factored ₱ 1,500,000
x 80%
Gross cash proceeds ₱ 1.200,000
Less: Service charge 0
₱ 1,200,000
Net cash proceeds

Requirement 2
Solutions:
Net cash proceeds ₱ 1,200,000
Carrying value of accounts receivable (₱ 1,500,000 - ₱ 180,000) ₱ 1,320,000
Loss on factoring of the accounts receivable ₱ (120,000)

Requirement 3 Solution:
Cash ₱ 1,200,000
Allowance for doubtful accounts - Accounts receivable ₱ 180,000
Loss on factoring of accounts receivable ₱ 120,000
Accounts receivable ₱ 1,500,000
To record the sale of accounts receivable

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