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  • Write Your Good-Form Solutions Below and Bolden Your Answer: Cash Received From Factoring 692,424.66 692,250.00

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    Anne Estrella
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    Taylor Company factored P750,000 of accounts receivable at year-end, surrendering control to the factor. The factor accepted the accounts receivable subject to recourse for nonpayment and assessed a 2% fee, retaining a 4% holdback. The factor also charged 12% interest on a 51-day maturity. **a. The amount of cash initially received from the factoring is P692,424.66.** **b. Assuming all accounts receivable are collected, the total cost of factoring the accounts receivable is P27,575.34.**

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    Taylor Company factored P750,000 of accounts receivable at year-end, surrendering control to the factor. The factor accepted the accounts receivable subject to recourse for nonpayment and assessed a 2% fee, retaining a 4% holdback. The factor also charged 12% interest on a 51-day maturity. **a. The amount of cash initially received from the factoring is P692,424.66.** **b. Assuming all accounts receivable are collected, the total cost of factoring the accounts receivable is P27,575.34.**

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    131 views1 page

    Write Your Good-Form Solutions Below and Bolden Your Answer: Cash Received From Factoring 692,424.66 692,250.00

    Uploaded by

    Anne Estrella
    Taylor Company factored P750,000 of accounts receivable at year-end, surrendering control to the factor. The factor accepted the accounts receivable subject to recourse for nonpayment and assessed a 2% fee, retaining a 4% holdback. The factor also charged 12% interest on a 51-day maturity. **a. The amount of cash initially received from the factoring is P692,424.66.** **b. Assuming all accounts receivable are collected, the total cost of factoring the accounts receivable is P27,575.34.**

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Taylor Company factored P750,000 of accounts receivable at year-end. Control was surrendered.

    The factor
    accepted the accounts receivable, subject to recourse for nonpayment.

    The factor assessed a fee of 2% and retained a holdback equal to 4% of the accounts receivable.

    In addition, the factor charged 12% interest computed on a maturity of fifty-one days. The fair value of the
    recourse obligation is P15,000.

    REQUIRED
    a. What is the amount of cash initially received from the factoring?
    b. Assuming all accounts receivable are collected, what is the cost of
    factoring the accounts
    receivable?

    Write your good-form solutions below and bolden your answer

    Accounts
    receivable 750,000.00
    Factor's holdback 30,000.00
    Factoring fee 15,000.00
    Interest on
    factoring 12,575.34 or (750,000 x 12% x 51/360) = 12,750.00
    Cash received from factoring 692,424.66 or 692,250.00

    Factoring fee 15,000.00


    Interest on
    factoring 12,575.34 or (750,000 x 12% x 51/360) = 12,750.00
    Total cost of factoring 27,575.34 or 27,750.00

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