PROBLEM 8-8

a.) Cash 4,500,000

Allowance for doubtful accounts 200,000
Receivable Factor 600,000
Loss on factoring 700,000
Accounts Receivable 6,000,000

b.) Cash 600,000

Receivable from factor 600,000

Gross Amount 6,000,000

Less: Commission (15% × 6,000,000) 900,000
Factor’s holdback (10% × 6,000,000) 600,000 1,500,000
Cash received from factoring 4,500,000

Net sale Price (6,000,000-900,000) 5,100,000

Carrying amount (6,000,000-200,000) 5,800,000
Loss on Factoring 700,000

PROBLEM 8-9

July 1 Cash 680,000

Service charge 40,000
Receivable from factor 80,000
Accounts Receivable 800,000

July 15 Sales Return and allowances 20,000

Receivable from factor 20,000

31 Cash 60,000
Receivable form factor 60,000