How much is the cost of factoring

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Kadita Co. factored P1,000,000 accounts receivable to Ruby Financing Corp. on a without recourse basis on January 1, 2021. Ruby charged a 4% service fee and retained a 10% holdback to cover expected sales returns. In addition, Ruby charged a 12% interest computed on a weighted average time to maturity of the receivables of 73 days based on 365 days.

Question 1: How much is the cost of factoring assuming all of the receivables have been collected?

On October 1, 2021, Claude co. discounted a 600,000, one-year, 12% note, received from a customer on January 1, 2021 with a bank at 14% on a without recourse basis.

Question 2: how much is the loss on discounting

Reference no: EM132912580

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