Assignment Receivable to Receivable Financing

Write a summary of your final answer(vertically from 1 to 10), and provide your solution in good form
1. On July 1, Fisher Company sold Php2,650,000 in accounts receivable for cash of Php2,500,000. The factor withheld 10% of the cash
proceeds to allow for possible customer returns and other adjustments. An allowance for bad debts of Php300,000 had previously been
established by Fisher in relation to these accounts. What was the loss on factoring recognized by Fisher Company?

2. Odom Company received from a customer a one-year, Php250,000 note bearing annual interest of 8%. After holding the note for six
months, Odom discounted the note at Metrobank at an effective interest rate of 10%. What amount of cash did Odom receive from the
bank?

3. On September 30, 2016, a corporation sold to a bank, a customer’s 18 percent, 60-day note, dated August 31, 2016, with a face amount
of P3,000. The bank discounted the note at 12%. The cash received by the corporation would be _____.

If on April 15, 2016, Bryant Company discounted a 12%, 180-day note due on July 20, 2016 at 13% in exchange for an equipment with a book
value of Php400,000.
4. What amount should Bryant Company report as gain or loss on sale of the equipment?
5. How much would be the interest income to be reported by Bryant for 2016 related to the promissory notes?
6. What is the date of the promissory note?

7. A company received in payment for the merchandise sold an interest bearing note with a face amount of P100,000, an annual interest
rate of 12%, and a term of 6 months. The company sold this note to a bank, at a discount rate of 15%, when the note had 90 days
remaining to maturity. How much interest expense should the company report as a result of discounting, assuming the discounting is
accounted for as a secured borrowing?

8. On April 17, 2016, Westside Co. accepted a P65,000, 8%, 90-day note from a customer. On June 11, the note was discounted at 10%
under a conditional sale. At maturity date, the note was dishonored and the bank charged P1,250 protest fee. If on July 26, 2016, the
customer pays the account due plus 8% interest. How much should Westside report as Loss from Notes Receivable Discounted and the
total amount received on July 26, 2016?

9. Yasha Co. sells P400,000 of accounts receivable to a factor and receiving 75% of the value of the factored account less 10% commission.
Yasha already establish a doubtful allowance for this receivable at 5% and a sales discount of 2%. How much should Yasha received
upon the remittance of the factor’s holdback, assuming a customer was given a credit of P15,000 for the sales return?

10. On October 1, 2015, HOU assigned on notification basis a P500,000 accounts receivable to a bank receiving a cash advance equal to
80% less 5% service charges for the assessment of the accounts receivable. The bank also charge 1% monthly interest on the
outstanding balance of the note. At the end of October, the bank reported that P300,000 of the receivables were collected of which 60%
were given a 2% sales discount, P5,000 was credited for sales returns. The bank charges the collections first to the interest and the
balance to the loans. Compute for the balance of the loans and the equity on assigned accounts to be reported by HOU on October 31,
2016.

On December 31, 2023, Mami Co “Accounts receivable” balance per ledger of P1,250,000 includes:
1. Master Card or Visa Credit Card sale of merchandise to customer – P10,000
2. Overpayment to supplier for inventory purchased on account – P20,000
3. Insurance claim on automobile accident – P2,000
4. Advance to sales manager due in one year – P4,000
5. 5-year Note receivable due from company president (This was issued by the president for the loan granted to him) – P300,000
6. Interest due on 5-year note from company president, interest is payable annually – P6,000
7. Acceptance of 6-month note for past due account arising from sale of inventory – P5,000
8. Accrued interest receivable on the note above – P100
9. Overpayment by customer of an account receivable – P5,000
10. Accounts receivable to customers definitely uncollectible – P4,000
11. Other trade account receivable – unassigned – P50,000
12. Trade accounts receivable assigned – P10,000
13. Notes receivable customer (This note is for a cash loan made to this customer collectible in 3 years) – P30,000
14. Claim for a tax refund from last year – P3,000
15. Prepaid insurance –months remaining in policy period – P4,000
16. Advances to or receivable from stockholders (P100,000 is collectible currently) – P250,000
17. Advances to affiliates – P125,000
 18. Subscription receivable – P150,000
19. Special deposit on contract bids – P30,000
20. Dividends receivable – P10,000
21. Notes receivable dishonored – P5,000
22. Accrued rent receivables – P6,000
23. Claims against common carrier – P4,900
24. Acceptance of 8-month note from employees arising from sale of inventory – P6,000
25. Trade installment receivable due within 16 months, gross of unearned interest income of P20,000 – 220,000
Required: Based on the above data, compute for the balances as of December 31, 2023 o the following:
11. Trade accounts receivables
12. Trade notes receivables
13. Trade and other receivables to be presented in the current asset section
14. Non-current receivables
15. Non-trade receivables

Since it started its operations in 2019, Valdo Co. carried no allowance for doubtful accounts. Uncollectible receivables were expensed as
written off and recoveries were credited to income as collected. On March 1, 2023 (after the financial statements were issued), management
recognized that Valdo accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful
accounts was necessary.

Data for the five years follow:

Credit Sales Accounts Written Off Recoveries
2019 2,100,000 20,000 15,000
2020 1,850,000 40,000 20,000
2021 2,050,000 130,000 5,000
2022 2,000,000 22,000 20,000
2023 2,000,000 113,000 40,000
The year-end balance of accounts receivable are as follows:
December 31, 2022 – P1,000,000 December 31, 2023 – P1,200,000

Bad debts are provided for as a percentage of sales.

16. The percentage to be used to compute for the allowance for bad debts on December 31, 2023 would be ______.
17. How much would be the doubtful accounts expense for 2023?
18. If the allowance for doubtful accounts on January 1, 2023 is P400,000, how much is the allowance for doubtful accounts December 31,
2023.

On December 31, 2022, the receivable account of Piggy Bank Corporation is consisting of the following:
Accounts Receivable P 2,500,000
Notes Receivable 1,900,000
Loans Receivable 3,000,000
Allowance for doubtful accounts 50,000
Information on receivable and transaction for 2023 were as follows:
Accounts Receivable
 Sales - cash and credit – P6,750,000
 Collections from account customers of which 60% are from customer who avails the discount of 2%, and 10% are from customers
who avails the 1% discount – P3,500,000.
 Account receivable written off as worthless, of which P20,000 were recovered and which are not included in the collections –
P35,000.
 Sales returns of which 40% represents cash refund which is also 4% of cash sales– P55,000.
 The company has the policy of providing a monthly doubtful account equal ¼% of credit sales net of returns, before making the
adjustment at the year-end using receivable as basis for bad debts.
 During the year, the company also made a receivable financing agreement as follows:
o Factored P1,000,000 of the receivable on November 15, 2022, and was charged with 5% assessment fee and 15% interest
computed on weighted average time to maturity of 45 days. The company agreed to maintain 10% equity on receivable
factored. By the end of the year, all the receivable factored were collected and 25% of which took advantage of the sales
discount of 2%.
 o Assigned P750,000 specific receivable as collateral on a P500,000, 10% loan on December 1, 2022, the assignee charged
5% finance fee deducted in advance. Collections on these accounts receivable on December amounted to P250,000, of
which 60% took advantage of the 2% cash discount. The company remitted the collection to the assignee in payment of the
loan and interest.
Notes Receivable
 The P1,500,000 note receivable is dated May 1, 2022 bears interest at 9%, and represents the balance of the consideration received
from sale of Laidon’s electronics division to Bradd Company. Principal Payments of P500,000 plus appropriate interest are due on
May 1, 2023, 2024, and 2025. The first principal and interest payment were made on May 1, 2023. Collection of the installments is
reasonably assured.
 The P400,000 note receivable is dated September 30, 2020, bears interest at 8%, and is due on September 30, 2025. The note is
due from John Mateo, president of Laidon Inc., and is collateralized by 10,000 shares of Laidon’s ordinary shares. Interest is payable
annually on September 30, and all interest payment were paid on their due dates through September 30, 2023. The quoted market
price of Laidon’s ordinary share was P45 per share on December 31, 2023.
 On April 2023 Laidon sold a patent to Belly in exchange for a P100,000 non-interest-bearing note due on April 1, 2025. There was no
established exchange price for the patent and the note had no ready market. The prevailing interest rate for the note of this type at
April 1, 2023 was 15%. The patent had a carrying value of P40,000 at January 1, 2023 and the amortization for the year ended
December 31, 2023, would have been P8,000. The collection of the note is reasonable assured.
 On July 1, 2023, Laidon sold a parcel of land to Carrie for P2,000,000 under an installment sale contract. Carrie made a P600,000
cash down, and signed a four-year, 16% promissory note for the balance. The equal annual payment of principal and interest on the
note will be P500,000 payable on July 1, 2024 through July 1, 2027. The land could have been sold at an established cash price of
P2,000,000. The cost of the land to Laidon was P1,500,000. The collection of the note is reasonable assured.
Loans Receivable
The loans receivable represents two outstanding loans given to its officer.
 The first loan is for P2,000,000, 12%, 5-year dated April 1, 2020. At the date of the loan the company incurred P29,655 for
the direct origination cost and deducted the direct origination fee of P100,000. On April 1, 2023, due to financial difficulty, the
officer negotiated a payment scheme on its outstanding loan and interest due which the company approved as follows:
Interest of 8% will be paid starting April 1, 2024, and principal payment of P500,000 every April 1, starting April 1, 2025.
 The second loan is for P1,500,000, with an interest rate of 14%, and was issued on June 30, 2020, payable in semi-annual
installment of P250,000 every June 30, and December 31. Upon the approval of the loan company collected an origination
fee equal to 50% of the origination cost incurred, resulting in an effective rate of 12%.
Prepare a schedule for:
19. The accounts receivable, notes receivable, loans receivable and interest receivable to be reported as current asset.
20. Notes receivable and loans receivable to be reported as noncurrent assets
21. Correct balance of the loan’s receivable as of December 31, 2022 and 2023.
22. Interest Income, Gain on sale and Interest Expense
23. Total cash collection relating to accounts receivable.
24. Total cash collection relating to Notes Receivable and Loans Receivable.
25. Net Sales.
26. Allowance for doubtful accounts
27. Doubtful accounts expense.
28. Loans Impairment loss.