Reference no: EM133239753
In order to generate additional cash for its expanding business operation, Maroon Company had the following receivable financing during the year 2021.
On February 14, the company factored P1,200,000 accounts receivable. Factoring fee was 10%. The finance company withheld 6% of the purchase price as protection against sales returns.
On March 1, accounts receivable amounting to P500,000 were assigned to BPI Bank as collateral for a loan. The bank advanced 80% of the assigned accounts less finance charge of 5% based on the amount advanced. During the month of March, Maroon collected P350,000 of the assigned accounts receivable. The amount was remitted to BPI on April 1. This amount was applied first to interest at the rate of 1% per month based on the outstanding balance and the remainder was applied to principal.
On March 19, a non-interest bearing note receivable with a face value of P50,000 was discounted with Citi Bank at a discount rate of 10%. The P50,000 note was dated Feb. 15, 2021 and is due on June 15, 2021. (use 360 days)
How much is the total cash received by Maroon Company from receivable financing? (factoring, assignment and discounting)