On March 1, 20X1 ABC Co. assigned its P1,000,000 accounts receivable to B Bank in exchange for a 2-month 12% loan equal to 75% of the assigned receivables. ABC received the loan proceeds after a 2% deduction for service fee based on the assigned receivables.. During March, P500,000 were collected from the receivables. Sales returns amounted to P150,000. How much cash is received from the assignment transaction on March 1? 730,000 735,000 1,230,000 1,235,000
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.
1.
On March 1, 20X1 ABC Co. assigned its P1,000,000 accounts receivable to B Bank in exchange for a 2-month 12% loan equal to 75% of the assigned receivables. ABC received the loan proceeds after a 2% deduction for service fee based on the assigned receivables.. During March, P500,000 were collected from the receivables. Sales returns amounted to P150,000. How much cash is received from the assignment transaction on March 1?
730,000
735,000
1,230,000
1,235,000
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