Notes receivable
Ques t i on3 TheNo t esr ec ei v a bl eac c ountofMar i aCo.hasadebi tbal anc eofP239, 200 o nDe c emb er3 1,2 01 2.Th er ewasnob al a nc ea tt h ebe gi n ni ngo ft h ey e ar . Youranal y si soft heac countr ev eal st hef ol l owi ng: 1 2
%
4
5 6
Notes Notes amou amounti nting ng to P845,00 P845,000 0 were were recei received ved from from custom customers ers during during the the year. Notes Notes of of P416, P416,000 000 were were coll collect ected ed on due date datess and and notes notes amou amounti nting ng to to P221,000 were discounted at the etro !an". #he Notes receiva$le account was credited for the notes discounted. &f the the P221, P221,000 000 note notess disco discount unted, ed, P104, P104,000 000 was was 'aid 'aid on matu maturit rity y date date while a note for P%1,200 was dishonored and was charged $ac" to Notes (eceiva$le account. )ash )ash of P%%,00 P%%,000 0 was receiv received ed as 'artia 'artiall 'aymen 'aymentt on notes notes not not yet yet due. due. #he amount received was credited to *ia$ility on Partial Payments account. + note note for for P50,0 P50,000 00 was was 'led 'ledged ged as as coll collate ateral ral for a $an" $an" loan. loan. nclud ncluded ed in the com'any com'any-s -s cash cash account account $alance $alance is a % month month note note from from an officer amounting to P8,000 which is over a month 'ast due.
As s umi ngt hatMar i aCo.wi l l us eaNot esr ec ei v abl eDi s c ount edac c ount ,t he adj us t edbal anc eoft heNo t esRec ei v a bl eac c ountonDec ember31,2012 ,i s 175, 000 260, 800 364, 800 323, 200
SOL OL UTI ON: nad/usted $alance 845,000 416,000 221,000 %1,2003 Partial collection recorded as a lia$ility Notes receiva$le discounted still outstanding 221,000 104,000 %1,2003 ishonored note +d/usted $alance
2%,200 %%,0003 85,800 %1,2003 260,800
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t )
Ques t i on4 Not er ec ei v abl edi s count edwi t houtr ec our s es hal l be
Ex cl udedf r om t ot al r ec ei v abl eswi t houtdi s c l os ur eofc ont i ngentl i abi l i t y I nc l udedi nt ot al r ec ei v abl eswi t hdi s cl os ur eofc ont i ngentl i abi l i t y f r om t ot al r ec ei v abl eswi t hdi s cl os ur eofc ont i ngentl i abi l i t y
Ex c l uded
I nc l udedi nt ot al
r ec ei v abl eswi t houtdi s c l os ur eofc ont i ngentl i abi l i t y 2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t )
Ques t i on5 Not er ec ei v abl edi s count edwi t houtr ec our s es hal l be I nc l udedi nt ot al r ec ei v abl eswi t hdi s c l os ur eofc ont i ngentl i abi l i t y I nc l udedi nt ot al r ec ei v abl eswi t houtdi s c l os ur eofc ont i ngentl i abi l i t y Ex cl udedf r om t ot al r ec ei v abl eswi t houtdi s c l os ur eofc ont i ngentl i abi l i t y Ex cl udedf r om t ot al r ec ei v abl eswi t hdi s c l os ur eofc ont i ngentl i abi l i t y
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t )
Ques t i on7 TheNo t esr ec ei v a bl eac c ountofMar i aCo.hasadebi tbal anc eofP239, 200 o nDe c emb er3 1,2 01 2.Th er ewasnob al a nc ea tt h ebe gi n ni ngo ft h ey e ar . Youranal y si soft heac countr ev eal st hef ol l owi ng: 1 2
%
Notes Notes amou amounti nting ng to P845,00 P845,000 0 were were recei received ved from fromcus custom tomers ers duri during ng the the year. Notes Notes of of P416, P416,000 000 were were collec collected ted on due due dates dates and and notes notes amount amounting ing to P221,000 were discounted at the etro !an". #he Notes receiva$le account was credited for the notes discounted. &f the the P221, P221,000 000 note notess disco discount unted, ed, P104, P104,000 000 was was 'aid 'aid on matu maturit rity y date date while a note for P%1,200 was dishonored and was charged $ac" to Notes (eceiva$le account.
4
5 6
)ash )ash of P%%,00 P%%,000 0 was receiv received ed as 'artia 'artiall 'aymen 'aymentt on notes notes not not yet yet due. due. #he amount received was credited to *ia$ility on Partial Payments account. + note note for for P50,0 P50,000 00 was was 'led 'ledged ged as coll collater ateral al for for a $an" $an" loan. loan. nclud ncluded ed in the com'any com'any-s -s cash cash account account $alance $alance is a % month month note note from from an officer amounting to P8,000 which is over a month 'ast due.
As s umi ngt hatMar i aCo.wi l l us eaNot esr ec ei v abl eDi s c ount edac c ount ,t he adj us t edbal anc eoft heNo t esRec ei v a bl eac c ountonDec ember31,2012 ,i s 3 23 , 2 00 3 64 , 8 00 2 60 , 8 00 1 75 , 0 00
SOL OL UTI ON: nad/usted $alance 845,000 416,000 221,000 %1,2003 Partial collection recorded as a lia$ility Notes receiva$le discounted still outstanding 221,000 104,000 %1,2003 ishonored note +d/usted $alance
2%,200 %%,0003 85,800 %1,2003 260,800
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t )
Ques t i on9 I nc al c ul at i ngt hec ar r y i ngamountofal oanr ec ei v abl e,t hel enderaddst ot he pr i nc i pal
ire irect ct loan oan ori origi gina nati tion on cost cost incu incurr rred ed $y the lend lender er ndi ndire rect ct loan loan orig origin inat atio ion n cos costt inc incur urre red d $y the the len lende der r *oan *oan orig origin inat atio ion n fee feess cha charg rged ed to to the the $or $orro rowe wer r
IandI Ionl y IandI I Ionl y Ionl y I ,I I ,andI I I
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t )
Ques t i on10 I ft her ei sev i denc et hatani mpai r mentl os sonl oanr ec ei v abl ehasbeen i nc ur r ed,t heamountoft hel os si sequal t ot he Ex c es soft hec ar r y i ngamountoft hel oanr ec ei v abl eov ert hepr es ent v al ueoft hec as hfl owsr el at edt ot hel oan. Ex c es soft hepr es entv al ueofc as hfl owsr el at edt ot hel oano v ert he c ar r y i ngamountoft hel oanr ec ei v abl e. Ex c es soft hepr i nc i pal amountoft hel oanov eri t sc ar r y i ngamount Ex c es soft hec ar r y i ngamountoft hel oanov ert hepr i nc i pal amountoft he l oan. 2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-Not esRec ei v abl e( Di ffic ul t ) Receivable financing
Anent i t yf ac t or edi t sac count sr ec ei v abl ewi t houtr ec our s ewi t habank .The ent i t yr ec ei v edc as hasar es ul toft het r ans ac t i onwhi c hi sbes tdes cr i bedas
Loanf r om bankt ober epai db yt hepr oc eedsf r om t heent i t y ' sac c ount s r ec ei v abl e Loanf r om bankc ol l at er al i z edbyt heent i t y ' sac count sr ec ei v abl e. Sal eoft heent i t y ' sac count sr ec ei v abl et ot hebankwi t ht her i s kof unc ol l ec t i bl eac c ount sr et ai nedbyt heent i t y Sal eoft heent i t y ' sac count sr ec ei v abl et ot hebankwi t ht her i s kof unc ol l ec t i bl eac count st r ans f er r edt ot hebank . 2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on2 Amel Compan ypr o vi desfi nanc i ngt oot herent i t i esbypur c has i ngt hei r ac count sr ec ei v abl eonanonr ec our s ebas i s .Amel c har gesi t sc l i ent sa c ommi s si onof15% onal l r ec ei v abl esf ac t or ed.I naddi t i on,Amel wi t hhol ds 10% ofr ec ei v abl esf ac t or edaspr ot ec t i onagai ns ts al esr et ur nsandot her adj us t ment s .Amel c r edi t st he10% wi t hhel dt oCl i ent sRet ai nerac c ountand mak e spa y ment me st oc l i ent satt heendofeac hmont hs ot hatt hebal anc ei nt he r et ai neri sequal t o10% ofunpai dr ec ei v abl esatt heendoft hemont h. Ex per i enc ehasl edAmel t oes t abl i s hanal l owanc ef ordoubt f ul ac c ount sof 4% ofal l unpai dr ec ei v abl espur c has ed. OnDecemb mber1,Amelpur chasedr ecei vabl esf r om Mot or wayComp mpany t ot al i ngP3, 000, 000.Mot or wayhadpr ev i ous l yes t abl i s hedanal l owanc ef or doubt f ul ac c ount sf ort hes er ec ei v a bl e sa tP100, 000.ByDec ember31 ,Amel hadc ol l ec t edP2, 500, 000ont hes er ec ei v abl es . Wha ti st hel os sonf a c t o r i n gt ob er ec o gni z e db yMo Mo t o r wa yComp an y ?
450, 000
750, 000
650, 000
350, 000
SOL OL UTI ON: +ccounts receiva$le )ommission Net sales 'rice )arrying value of accounts receiva$le %,000,000 100,0003
%,000,000 450,0003 2,550,000
*oss on factoring
%50,0003
2,00,000
Ac t ual l y ,t heent r yont hebook sofMot or wa yCompan yont hedal eoff ac t or i ng i s : )ash +llowance for dou$tful accounts *oss on factoring ue from factor +ccounts receiva$le
2,250,000 100,000 %50,000 %00,000 %,000,000
Theent r yont hebook soft hef ac t or ,Amel Compan y ,i s : +ccounts receiva$le )ash )ommission income )lients retainer
%,000,000 %50,000
2,250,000 450,000 %00,000
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on3 Amel Compan ypr o vi desfi nanc i ngt oot herent i t i esbypur c has i ngt hei r ac count sr ec ei v abl eonanonr ec our s ebas i s .Amel c har gesi t sc l i ent sa c ommi s si onof15% onal l r ec ei v abl esf ac t or ed.I naddi t i on,Amel wi t hhol ds 10% ofr ec ei v abl esf ac t or edaspr ot ec t i onagai ns ts al esr et ur nsandot her adj us t ment s .Amel c r edi t st he10% wi t hhel dt oCl i ent sRet ai nerac c ountand mak e spa y ment me st oc l i ent satt heendofeac hmont hs ot hatt hebal anc ei nt he r et ai neri sequal t o10% ofunpai dr ec ei v abl esatt heendoft hemont h.
Ex per i enc ehasl edAmel t oes t abl i s hanal l owanc ef ordoubt f ul ac c ount sof 4% ofal l unpai dr ec ei v abl espur c has ed. OnDecemb mber1,Amelpur chasedr ecei vabl esf r om Mot or wayComp mpany t ot al i ngP3, 000, 000.Mot or wayhadpr ev i ous l yes t abl i s hedanal l owanc ef or doubt f ul ac c ount sf ort hes er ec ei v a bl e sa tP100, 000.ByDec ember31 ,Amel hadc ol l ec t edP2, 500, 000ont hes er ec ei v abl es . Wha ti st hel os sonf a c t o r i n gt ob er ec o gni z e db yMo Mo t o r wa yComp an y ? 6 50 , 0 00 4 50 , 0 00 3 50 , 0 00 7 50 , 0 00
SOL OL UTI ON: +ccounts receiva$le )ommission Net sales 'rice )arrying value of accounts receiva$le %,000,000 100,0003
%,000,000 450,0003 2,550,000
*oss on factoring
%50,0003
2,00,000
Ac t ual l y ,t heent r yont hebook sofMot or wa yCompan yont hedal eoff ac t or i ng i s : )ash +llowance for dou$tful accounts *oss on factoring ue from factor +ccounts receiva$le
2,250,000 100,000 %50,000 %00,000 %,000,000
Theent r yont hebook soft hef ac t or ,Amel Compan y ,i s :
+ccounts receiva$le )ash )ommission income )lients retainer
%,000,000 %50,000
2,250,000 450,000 %00,000
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on4 Al l butoneoft hef ol l owi ngar er equi r edbef or eat r ans f erofr ec ei v abl escanbe r ec or dedasas al e? Thet r ans f er eec anpl edgeors el l t het r ans f er r edr ec ei v abl es . Thet r ans f er r edr ec ei v abl esar ebey ondt her eac hoft het r ans f er orandi t s c r edi t or s . Thet r ans f er ormai nt ai nscont i nui ngi nv ol v ement Thet r ans f er orhasnotk epteffec t i v ec ont r ol ov ert het r ans f er r ed r ec ei v a bl est hr oughar epur c has eagr eement . 2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on5 I ffi nanc i al as set sar eex c hangedf orc as handot herc ons i der at i onbutt he t r ans f erdoesnotmeett hec r i t er i af oras al e,t het r ans f er orandt het r ans f er ee s houl dac countf ort het r ans ac t i onas( I )Sec ur edbor r owi ngand( I I )Pl edgeof c ol l at er al Nei t herInorI I Ionl y Bot hIandI I
I Ionl y
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on6 OnJ an ua r y1,2 014 ,L ut h erComp an ys ol dl an dwi t hc ar r y i ngamo unto fP 1, 500, 000i ne x c hangef ora9mont h,10% no t ewi t hf ac ev a l ueo f P2, 000, 000.The10% r at epr oper l yr efl ec t st het i mev al ueofmone yf ort hi s t y peofnot e. OnApr i l 1,2014 ,L ut herCompan ydi s c ount edt heno t ewi t hr ec our s e.The bankdi s countr at ei s12%.Thedi s count i ngt r ans ac t i oni sac count edf orasa s ec ur edbor r o wi ng. OnOc Oc t ober1,2014,t hema mak erdi s honor edt henot er ec ei v abl e.Lut her Compan ypai dt hebankt hemat ur i t yv al ueoft henot epl uspr ot es tf eeofP 1 0, 0 00 . OnDec ember31,2014,L ut herCompan yc ol l ec t edt hedi s honor edno t ei nf ul l pl us12% annual i nt er es tont het ot al amountdue. Whati st hei nt er es te x pens et ober ec ogni z edb yL ut herCompan yonApr i l 1, 2014? 5 0, 00 0 2 1, 00 0 2 5, 00 0 2 9, 00 0
SOL OL UTI ON:
Princi'al nterest 2,000,000 107 123 aturity value iscount 2,150,000 127 6123 Net 'roceeds Princi'al +ccrued interest receiva$le 2,000,000 107 %123 !oo" value of note receiva$le Net 'roceeds *ess9 !oo" value of note receiva$le nterest e'ense
2,000,000 150,000 2,150,000 12,000 2,021,000 2,000,000 50,000 2,050,000 2,021,000 2,050,000 2,0003
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on7 I ffi nanc i al as set sar eex c hangedf orc as handot herc ons i der at i onbutt he t r ans f erdoesnotmeett hec r i t er i af oras al e,t het r ans f er orandt het r ans f er ee s houl dac countf ort het r ans ac t i onas( I )Sec ur edbor r owi ngand( I I )Pl edgeof c ol l at er al I Ionl y Ionl y
Nei t herInorI I Bot hIandI I
2. 0Fi nanc i al Ac c ount i ngandRepor t i ng-4. 1Rec ei v abl eFi nanc i ng( Di ffic ul t )
Ques t i on8 Dur i ngi t ssec ondy earofoper at i ons ,Kar enCompanyf oundi t s el fi nfi nanc i al di ffic ul t i es .Kar endec i dedt ous ei t sac c ount sr ec ei v abl easameansof obt ai ni ngc as ht oc ont i nueoper at i ons .OnJ ul y1,2014,Kar ens ol d P1, 500, 000ofac c oun t sr ec ei v a bl ef orc as hpr oc eedsofP1, 390, 000.Nobad d ebtal l o wa nc ewa sas s o c i a t edwi t ht h es eac c o un t s .OnDec e mb mb er15 ,2 01 4, Kar enas s i gnedt her emai nderofi t sac c ount sr ec ei v abl e,P5, 000, 000asof t hatdat e,ascol l at er al onaP2, 500, 000, 12% annual i nt er es tr at el oanf r om Fi n an c eCo mp mp an y .Ka r e nr e c ei v e dP2 , 5 00 , 0 00l e s sa2% fi n an c ec h ar g e. Addi t i onal i nf or mat i oni sasf ol l ows :
+llowance fo for $ad de$ts $e $efore ad/ustment, 12 12%12014 :stimated uncollecti$le, 12%12014 +ccounts receiva$le ecluding factored and assigned accounts, 12%1 2014
65,000 %7 of accounts receiva$le 1,000,000
Noneo ft heas s i gnedac c ount shadbeenc ol l ec t edb yt heendo ft hey e ar . Ka r e nCo mp mp an ys h al l r e c og ni z eba dd eb te x p en s ef o r2 01 4a t 3 0, 00 0 1 80 , 0 00 9 5, 00 0 1 15 , 0 00
SOL OL UTI ON: +ccounts receiva$le unassigned +ccounts receiva$le assigned #otal accounts receiva$le (e;uired allowance 12%12014 %7 6,000,0003 +llowance for $ad de$ts $efore ad/ustment !ad de$t e'ense for 2014
1,000,000 5,000,000 6,000,000 180,000 65,000 115,000
