determine the cash received by ABC from nC20 after the full collection of client’s accounts. Round off final answer to the nearest peso.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
IA - RECEIVABLE FINANCING
17. ABC has an accounts receivable with a gross amount of P200,000 and 1% sales discount if collected within 60 days. ABC sold this account to nC20 Finance Inc under a continuing agreement, with a factoring fee and commission of 5%. Also, nC20 withheld 15% of the net accounts receivable as protection for possible merchandise returns from ABC’s client. Assuming nC20 was informed by ABC that the client has returned P10,000 worth of merchandise, and the client has paid its account fully to the bank, determine the cash received by ABC from nC20 after the full collection of client’s accounts. Round off final answer to the nearest peso.
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