CPA Co. factored accounts receivable of P2,500,000 with credit terms of 3/10, n/30 immediately after the shipment of goods to the customer. The factor charges a 5% service charge based on the gross amount of the receivables factored. In addition, the factor withheld 10% of the amount of the receivables factored to cover return and allowances. Ten days after, CPA Co. granted the customer whose accounts were factored a credit allowance of P120,000 for damage in the shipment. Five days after, final settlement was made with the factor. Assume continuing agreement. On the final settlement with the factor, how much cash is to be debited?

CPA Co. factored accounts receivable of P2,500,000 with credit terms of 3/10, n/30 immediately after the shipment of goods to the customer. The factor charges a 5% service charge based on the gross amount of the receivables factored. In addition, the factor withheld 10% of the amount of the receivables factored to cover return and allowances. Ten days after, CPA Co. granted the customer whose accounts were factored a credit allowance of P120,000 for damage in the shipment. Five days after, final settlement was made with the factor. Assume continuing agreement. On the final settlement with the factor, how much cash is to be debited?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 26Q: A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer...

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