Reference no: EM132787776

Question - On December 1, 2020, ABC Company assigned specific accounts receivable totaling P5,000,000 as collateral on a P4,000,000, 12% note from certain bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted in advance on the assigned accounts. The December collections of assigned accounts receivable amounted to P2,000,000 less cash discount of P200,000. On December 31, 2020, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2020 and the note payable. The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned accounts of P300,000.

Required -

1. Compute for the amount of cash received from the assignment of accounts receivable on December 1, 2020.

2. Compute the carrying amount of the note payable on December 31, 2020.