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  • Jimenez Problem 8-12

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    Gilbert Morales
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    1) The Motorway Company factored $3 million in accounts receivable for $2.25 million in cash received after deducting a 10% holdback of $300,000 and a 15% commission of $450,000. This resulted in a loss on factoring of $350,000. 2) The books of the Motorway Company show $225,000 in cash received from factoring, a $300,000 receivable from the factor, $100,000 in allowance for doubtful accounts, and $350,000 loss on factoring. 3) The books of the Freeway Company show $3 million in accounts receivable, $225,000 in cash received from factoring

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    1) The Motorway Company factored $3 million in accounts receivable for $2.25 million in cash received after deducting a 10% holdback of $300,000 and a 15% commission of $450,000. This resulted in a loss on factoring of $350,000. 2) The books of the Motorway Company show $225,000 in cash received from factoring, a $300,000 receivable from the factor, $100,000 in allowance for doubtful accounts, and $350,000 loss on factoring. 3) The books of the Freeway Company show $3 million in accounts receivable, $225,000 in cash received from factoring

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    6 views2 pages

    Jimenez Problem 8-12

    Uploaded by

    Gilbert Morales
    1) The Motorway Company factored $3 million in accounts receivable for $2.25 million in cash received after deducting a 10% holdback of $300,000 and a 15% commission of $450,000. This resulted in a loss on factoring of $350,000. 2) The books of the Motorway Company show $225,000 in cash received from factoring, a $300,000 receivable from the factor, $100,000 in allowance for doubtful accounts, and $350,000 loss on factoring. 3) The books of the Freeway Company show $3 million in accounts receivable, $225,000 in cash received from factoring

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 2

    Problem 8-12

    Gross Amount 3000000


    Hold Back(10%*3000000) -300000
    Commission(15%*3000000) -450000
    Cash Received 2250000

    Sales 2550000
    Carrying Amount of accounts receivable(3000000-100000) 2900000
    Loss on factoring 350000

    Accounts receivable factored 3000000


    Collection by Factor 2500000
    Balance - Dec 31 500000

    Recievable from factor per book 300000


    Required holdback(10%*500000) 50000
    Remittance from factor 250000

    Requirement 1: Books of Motorway Company


    1
    Cash 2250000
    Recievable from Factor 300000
    ADA 100000
    Loss on factoring 350000
    Accounts recievable 3000000
    #
    2
    Cash 250000
    Receivable from factor 250000
    #

    Requirement 2: Book of Freeway Company


    1
    Account Recievable 3000000
    Cash 2250000
    Client retainer 300000
    Commision income 450000
    #
    2
    Cash 2500000
    Accounts receivable 2500000
    #
    Client retainer 250000
    Cash 250000
    #
    Doubtful accounts 20000
    ADA(4%*500000) 20000
    #

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