Reference no: EM132939393

Problem - Gene Company provided the following:

July 01 Factored P800,000 of accounts receivable with a bank. The bank charged a factoring fee of 5% of the amount of accounts receivable factored. And withheld 10% of the accounts receivable factored to cover sales return and allowances. The bank determined that the recourse obligation has a fair value of P5,000.

July 15 Factored accounts are fully collected less sales return and allowances of P20,000.

July 31 Received a check from the bank as a final settlement of the factoring contract.

Required -

1. Calculate the Loss on Factoring on July 1, 2020 under with recourse, casual basis.

2. Calculate the Cost of factoring on July 1, 2020 under with recourse, regular means of financing.

3. Calculate the Balance of Receivable from Factor after recording receipt of the check from the bank as a final settlement of the factoring, under without recourse, regular means of financing.

4. Calculate the Cash to be paid on the Recourse Obligation, assuming the debtors defaulted under with recourse, casual basis.

5. Calculate the Gain on Recourse Obligation, assuming all the receivables were collected, under without recourse, casual basis.