Reference no: EM132923821
Question - Violet Company showed the following balances on December 31, 2019:
Accounts receivable-unassigned 1,000,000
Accounts receivable-assigned 300,000
Allowance for doubtful accounts-January 1 30,000
Receivable from factor 40,000
Note Payable-bank 240,000
During the current year. Violet Company found itself in financial distress and decided to resort to receivable financing. On June 30, Violet Company, factored P200,000 of its accounts receivable to a finance company. The finance company charged a factoring fee of 5% of the accounts factored and withheld 20% of the amount factored.
On December 31, Violet Company assigned P300.000 of its accounts receivable to a bank under a non-notification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned Violet Company signed a promissory note for the loan On December 31, it is estimated that 5% of the outstanding receivable may prove uncollectible. How much is the total proceeds received by Violet Company from the receivable financing (assignment and factoring)?
a. P225,000
b. P375,000
c. P390,000
d. P500,000