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CMA Company provides financing to other companies by purchasing their accounts receivable on a non-recourse basis. CMA charges its clients a commission of 15% on all receivables factored. In addition, CMA withholds 10% of receivables factored as protection against sales return and other adjustments. CMA credits the 10% withheld to Clients Retainer Account and makes payments to clients at the end of each month so that the balance in the retainer is equal to 10% of unpaid receivables at the end of the month. Experience has led CMA to establish an allowance for bad debts accounts of 4% of all unpaid receivables purchased. On December 1, CMA purchased receivables from CPA Company totaling 3,000,000. CPA had previously established an allowance for bad debts for these receivables at 100,000. By December 31, CMA had collected 2,500,000 on these receivables. Required:
Problem I. Prepare the entry on CPA Company on the date of factoring
Problem II. What is the amount of cash received by CPA?
Problem III. What is the loss on factoring to be recognized by CPA?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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