Problem 1: On October 1, 2022, Iligtas Company borrowed P2,000,000 from Sana sa RE Bank and issued

a promissory note for the same. The term of the loan is one year and discounted at 10%. The entity
pledged accounts receivable of P2,000,000 to secure the loan.
The entity collected P1,000,000 of its receivable. Use straight line method in amortization.
Prepare the journal entry for the transaction.

Problem 2: On May 1,2022, ISABLE Company assigned P2,000,000 of Accounts receivable to a bank
under a notification agreement. The bank gave a loan equal to 70% of the assigned amount less 4%
service charged. The entity signed a promissory note that provides for 1% interest per month on the
unpaid loan balance. The following are the transaction that took place regarding the assignment and
loan
May 31 – The entity received notice from the bank that P1,000,000 assigned AR was collected
less 5% discount. A check was sent to the bank to pay the interest
June 30 – The entity received notice from the bank that it collected P600,000 of the assigned
AR. Final payment was made using the amount and the excess was returned to the entity.
Prepare the necessary journal entry
How much was the cash received ISABLE Company from the bank?

Problem 3: SOCK8 Company factored AR of P1,000,000 with credit terms 2/10, n/30 immediately after
shipment of goods from the customer. The factor charged a 10% commission based on the gross
amount of AR being factored. In addition, the factor withheld 20% of the amount factored to cover for
the future sales return and allowances.
Prepare the initial journal entry
1. How much is the cash received from factor?
2. How much is the loss from factoring?
3. If after 5 days, the customer returned P100,000, and the rest of the receivable factored was
collected by the factor , how much is the cash received by SOCK8 Company?
4. If after 5 days, the customer returned P300,000, how much is the gain to be recognized by
SOCK8 Company?

Problem 4: SEMAJ Company factored P6,000,000 of accounts receivable to X Enterprises on October 1,

2021. Control was surrendered by the corporation. X accepted the receivables subject to recourse for
nonpayment. X assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable. In
addition, X charged 15% interest computed on a weighted-average time to maturity of the receivables
of 54 days. The fair value of the recourse obligation is P90,000.
1. How much is the cash received?
2. How much is the loss on factoring, assuming all receivables are collected?
3. How much is the loss on factoring, assuming the receivables aren’t collected?
Problem 5: On March 1,2023. LOVER Company accepted a notes receivable from customer amounting
to P1,000,000. The term of the notes is 8 months with 10% interest.
On May 1,2023, Jenny decided to discount the notes to a local bank without recourse at a discount rate
of 12%.
1. What amount of cash was received from discounting?
2. What amount should be recognized as loss on discounting?
3. If the customer doesn’t pay the notes on Maturity date, how much is to be transferred to the
accounts receivable of LOVER Company?

Problem 6: FLE NA ULIT Company accepted a notes from customer amounting to P2,000,000 on April
1,2023. The term of the notes is 10% interest and payable after 90 days.
On May 2, 2023, Levy discounted the notes with a bank at 15% discount rate.
1. How much was the cash received from discounting?
2. What amount is the loss on discounting?
3. If after the 90 days period, the customer did not pay and the bank charged P50,000 bank
charged as a result of the nonpayment. How much is to be transferred in the accounts
receivable of FLE NA ULIT company?

Problem 7: On May 1,2023, SHEESH discounted with a recourse a 6 months, 10% note dated April
1,2023 with a face amount of P5,000,000. The bank discount rate is 12%.
The discounting is accounted for as conditional sale.
On October 1,2023, the customer dishonored the notes. The entity paid the bank the maturity amount
plus P100,000 charges .
On December 31,2023, the customer paid the entity for the whole amount plus 10% interest on the
total amount due.
1. How much is the cash received from discounting?
2. How much was the loss on factoring?
3. What is the total amount collected from the customer on December 31,2023?
4. If the transaction was secured borrowing, prepare the necessary journal entry.