Problem 3 (Factoring on a non-recourse basis)

RX Company factored P2,000,000 of accounts receivable with a bank. The finance charge is 3% and 5%
was retained to

cover sales discounts, sales returns and allowances.

1. What amount of cash was received on the factoring of accounts receivable?

(2,000,000-60,000= 1,940,000-100,000)

1,840,000

What amount should be recognized as loss on factoring?

(2,000,000 -1,840,000)

160,000