Reference no: EM132999878

PROBLEM - On December 1, 2020, Jawhead Company assigned speci?c accounts receivable totaling P2,500,000 as collateral on a P2,000.000 12% note from Alice 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 P1 ,000,000 less cash discount of P100,000. 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 P50,000 on the assigned accounts and wrote off assigned accounts of P150000.

Required -

1. What amount of cash was received from the assignment of accounts receivable on December 1, 2020?

2. What is the carrying amount of note payable on December 31, 2020?

3. What amount should be disclosed as the equity of Jaw Company in assigned accounts on December 31, 2020?