Problem 8-6

a. Prepare journal entries to record the transactions.

Dec. 1 Accounts Receivable - assigned 1,500,000
Accounts Receivable 1,500,000

Dec. 1 Cash 1,250,000

Service Charge 50,000
Note Payable - Bank 1,300,000

Dec. 31 Cash 970,000

Sales Discount 30,000
Accounts Receivable - assigned 970,000

Dec. 31 Interest Expense (1% x 1,300,000) 13,000

Note Payable - Bank 957,000
Cash 970,000

b. Indicate the classification and disclosure of the accounts related to the assignment on December 31.
The accounts receivable – assigned with a balance of P500,000 should be classified as current asset and included in trade and
other receivables

The notes payable – bank of P343,000 should be classified and presented as a current liability

The company should disclose the equity in assigned accounts as follows:

Accounts Receivable - assigned 500,000
Note Payable - Bank -343,000
Equity in assigned accounts 157,000
et and included in trade and