How much proceeds is received from the 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.

Problem 1: How much proceeds is received from the factoring?

Problem 2: How much is the cost of factoring assuming all of the receivables have been collected?

Reference no: EM132912609

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