Problem 8-1

Mar 1 Cash 2,000,000

Notes Payable 2,000,000

Apr 1 Cash 980,000

Sales Discount 20000
Accounts Receivable 1,000,000

Jun 1 Cash 2,000,000

Accounts Receivable 2,000,000

Sep 1 Notes Payable 2,000,000

Interest Expense (2M x 12% x6/12) 120,000
Cash 2,120,000

Problem 8-2
Oct 1 Cash 3,600,000
Discount on Notes Payable 400000
Notes Payable 4,000,000

Dec 31 AJE to record amortization of Discount on Notes Payable

Interest Expense (400,000 x 3/12) 100000
Discount on Notes Payable 100000

SFP:
Current Liabilities:
Notes Payable 4,000,000
Discount on Notes Payable (300,000.00)
Carrying Amount 3,700,000

Notes to F/S:
Notes Payable - Bank
Accounts Receivable of Php5,000,000 are pledged to secure the
Php4,000,000 bank loan.

Problem 8-3:
May 1 A/R - Assigned 800,000
A/R 800,000

Cash 620,000
Service Charge 20,000
N/P 640000

5 SRA 30,000
A/R - Assigned 30,000
 10 Cash 490,000
Sales Discount 10000
A/R - Assigned 500,000

Jun 1 N/P - Bank 490,000

Interest Expense 12800
Cash 502,800

7 AFDA 10,000
A/R - Assigned 10,000

20 Cash 200,000
A/R - Assigned 200,000

Jul 1 N/P - Bank 150,000

Interest Expense 3000
Cash 153,000

A/R Assigned Balance

1-May assignment 800,000
5 SRA -30,000
10 collection -500,000
7-Jun write-off -10,000
20 collection -200,000
balance 60,000

A/R 60,000
A/R - Assigned 60,000

Problem 8-4
Jul 1 A/R - Assigned 1,500,000
A/R 1,500,000

Cash 1065000
Service Charge 60000
Notes Payable - Bank 1125000

Aug 1 Notes Payable - Bank 800,000

A/R Asigned 800,000

Interest Expense 22,500

Cash (1,125,000 x 2%) 22,500

Sep 1 Notes Payable - Bank 325,000

 Interest Expense (325,000 x2%) 6500
Cash 168,500
A/R - Assigned 500,000

A/R - Assigned
Jul 1 assigned 1,500,000
Aug 1 collection -800,000
Sep 1 collection -500,000
A/R-Assigned to be returned by bank 200,000

A/R 200,000
A/R - Assigned 200,000

Problem 8-5
Jul 1 A/R - Assigned 500,000
A/R 500,000

Cash 390,000
Service Charge 10000
N/P - Bank 400,000

Aug 1 Cash 330,000

A/R - Assigned 330,000

N/P - Bank 326,000

Interest Expense 4000
Cash 330,000

Sep 1 Cash 170,000

A/R - Assigned 170,000

N/P - Bank 74,000

Interest Expense 740
Cash 74,740

Problem 8-6
Dec 1 A/R - Assigned 1,500,000
A/R 1,500,000

Cash 1,250,000
Service Charge 50,000
N/P - Bank 1,300,000

Dec 31 Cash 970,000

Sales Discount 30,000
 A/R - Assigned 1,000,000

N/P - Bank 957,000

Interest Expense 13000
Cash 970,000

Requirement 2:
A/R Assigned 500,000 Asset Current Asset Trade Receivable
A/R - Unassigned Trade and Other Receivable line item
A/R - Assigned
Total
Less: AFDA
Net Realizable Value

N/P Bank 343,000 Liability Less than 1 year Notes Payable - Bank
Current Liability None-Trade

Disclosure: Equity in the assigned Accounts

A/R - Assigned 500,000
N/P - Bank 343,000
Equity in the assigned account 157,000

A=L+E

Problem 8-7
Jul 1 A/R - Assigned 800,000
A/R 800,000

Cash 616000
Service Charge 24000
Notes Payable - Bank 640000

Aug 1 Notes Payable - Bank 413,600

Interest Expense 6400
A/R -Assigned 420,000

Sep 1 Cash 91,336

Notes Payable - Bank 226,400
Interest Expense 2264
A/R -Assigned 320,000

A/R Assigned Balance as of Sep 1:

July 1 800,000
Aug 1 Collection -420,000
 Sep 1 Collection -320,000
60,000

A/R 60,000
A/R -Assigned 60,000

Problem 8-8
1 Cash 4,500,000
Loss on Factoring 700,000
Receivable from Factor 600000 Current Asset, Other Receivables
Allowance for Doubtful Accounts 200,000
A/R 6,000,000

Computation of Loss on Factoring:

A/R 6,000,000
Less: AFDA 200,000
NRV or Carrying Amount 5,800,000

Net Selling Price

Selling Price
A/R 6,000,000
Less: 15% Commission 900000 5,100,000

Loss on Factoring (5,800,000 - 5,100,000) 700,000

Commission 900000
AFDA -200,000
700000
Proceeds to Received:
A/R 6,000,000
Less: Commission 900000
Factor's Holdback 600000
4,500,000
2 Cash 600,000
Receivable from Factor 600,000

Problem 8-9
Jul 1 Net Selling Price:
A/R 800,000
Less: Factoring Fee 40000
760,000
Loss on Factoring:
NRV = A/R 800,000
 Net Selling Price 760,000
Loss on Factoring 40,000

Cash Proceeds:
A/R 800,000
Factoring Fee 40000
Factor's Holdback 80000
680,000
Jul 1 Cash 680,000
Loss on Factoring 40,000
Receivable from Factor 80000
A/R 800,000

Jul 15 SRA 20,000

Receivable from Factor 20,000

Jul 31 Cash 60,000

Receivable from Factor 60,000

Problem 8-10
Jun 1 A/R 500,000
Sales 500,000

3 Cash 340,000
Loss on Factoring/Service Charge 25000
Receivable from Factor 125000
Sales Discount 10000
A/R 500,000

9 SRA 50,000
Sales Discount 1000
Receivable from Factor 49,000

11 No Entry

15 Cash 76,000
Receivable from Factor 76,000

Problem 8-11
Jul 26 Cash 750,000
Loss on Factoring / Commission Expense 50000
Receivable from Factor 200000
A/R 1,000,000

Jul 28 SRA 50,000

 Receivable from Factor 50,000

Aug 31 Cash 150,000

Receivable from Factor 150,000

Problem 8-12
Jun 30 Cash 150,000
Loss on Factoring / Service Charge 10000
Receivable from Factor 40000
A/R 200,000

Dec 31 A/R - Assigned 300,000

A/R 300,000

Cash 225000
Service Fee 15000
Notes Payable 240000

AJE to record DA Expense for the Period:

A/R Unassigned 1,000,000
A/R Assigned 300,000
1,300,000
x % of uncollectibility 5%
Required Balance of AFDA 65000
Less: AFDA before adjustment 30,000
DAExpense 35,000

DAE 35,000
AFDA 35,000
Requirement 4:
A/R Unassigned 1,000,000
A/R Assigned 300,000
Total 1,300,000
Less: AFDA 65000
NRV 1,235,000
Current Asset; Trade Receivable; part of the line item Trade and Other Receivables

Receivable from Factor 40000

Current Asset; Other Receivable; part of the line item Trade and Other Receivables

Notes Payable Bank 240000

Current Liability; presented as a separate line item

Notes to Financial Statement:

Equity in A/R Assigned
 A/R Assigned 300,000
Notes Payable - Bank 240000
Equity in A/R Assigned 60,000

Problem 8-13:
Motorway Book (Borrower) Freeway Book (Factor or Creditor)
Dec 1
Cash 2,250,000 A/R 3,000,000
Receivable from Factor 300000 Commission Inc. 450000
AFDA 100,000 Clients Retainer 300000
Loss on Factoring 350000 Cash 2,250,000
A/R 3,000,000

Commission 450000
AFDA -100000
Loss on Factoring 350000

Dec 31
Collection of A/R
No Entry Cash 2,500,000
A/R 2,500,000

A/R 3,000,000
Collection -2500000
Balance 500,000
x 10%
Required Balance of
Retainer 50000
Balance of Retainer 300000
Remittance 250000

Cash 250000 Clients Retainer 250000

Receivable from Factor 250000 Cash 250000

DAExpense 20000
AFDA 20000