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05 - Receivable Financing and Notes Receivable

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  Page 1 of 2  REVIEW OF FINANCIAL ACCOUNTING THEORY AND PRACTICE RECEIVABLE FINANCING AND NOTES RECEIVABLE1.Purple Company shoe! he #ollo$n% &alan'es on De'em&er (1) *++,- A''oun s re'e$a&le/unass$%ne! P1)+++)+++ A''oun s re'e$a&le/ass$%ne! (++)+++ Alloan'e #or !ou& #ul a''oun s/0anuary 1 (+)+++Re'e$a&le #rom #a' or +)+++No e paya&le/&an2 *+)+++Dur$n% he year *++, Purple Company #oun! $ sel# $n #$nan'$al !$s ress an! !e'$!e! oresor o re'e$a&le #$nan'$n%.On 0une (+) Purple Company #a' ore! P*++)+++ o# $ s a''oun s re'e$a&le o a #$nan'e'ompany. The #$nan'e 'ompany 'har%e! a #a' or$n% #ee o# ,3 o# he a''oun s #a' ore!an! $ hhel! *+3 o# he amoun #a' ore!.On De'em&er (1) Purple Company ass$%ne! P(++)+++ o# $ s a''oun s re'e$a&le o a&an2 un!er a nonno $#$'a $on &as$s. The &an2 a!an'e! 4+3 less a ser$'e #ee o# ,3o# he a''oun ass$%ne!. Purple Company s$%ne! a prom$ssory no e #or he loan.On De'em&er (1) $ $s es $ma e! ha ,3 o# he ou s an!$n% a''oun s re'e$a&le mayproe un'olle' $&le. REQUIRED: a.En ry o re'or! he #a' or$n%.&.En ry o re'or! he ass$%nmen .'.En ry o a!5us he alloan'e #or !ou& #ul a''oun s on De'em&er (1.!.In!$'a e he 'lass$#$'a $on) presen a $on an! !$s'losure o# he a''oun s $nole! $nre'e$a&le #$nan'$n%.*.6an%al!an Company o& a$ne! a one/year loan o# P,)+++)+++ #rom a &an2 on Apr$l 1)*++,. The loan as !$s'oun e! a 1*3. The 'ompany s$%ne! a no e an! ple!%e! $ sa''oun s re'e$a&le o# P,)+++)+++ as 'olla eral #or he loan. In rela $on o he loan)6an%al!an shoul! repor no e paya&le on De'em&er (1) *++, a a. P)4,+)+++'. P,),+)+++&&. P)++)+++!. P),,+)+++(.On De'em&er 1) *++, Po7urru&$o Company ass$%ne! on a nonno $#$'a $on &as$sa''oun s re'e$a&le o# P,)+++)+++ o a &an2 $n 'ons$!era $on #or a loan o# 8+3 o# here'e$a&les less a ,3 ser$'e #ee on he a''oun s ass$%ne!. Po7urru&$o s$%ne! a no e#or he &an2 loan. On De'em&er (1) *++,) Po7urru&$o 'olle' e! ass$%ne! a''oun s o# P()+++)+++ less !$s'oun o# P*++)+++. Po7urru&$o rem$ e! he 'olle' $ons o he &an2$n par $al paymen #or he loan. The &an2 appl$e! #$rs he 'olle' $on o he $n eres an! he &alan'e o he pr$n'$pal. The a%ree! $n eres $s 13 per mon h on he loan &alan'e.In $ s De'em&er (1) *++, &alan'e shee ) Po7urru&$o shoul! repor no e paya&le as a'urren l$a&$l$ y a a.P1)9,)+++'. P1),,)+++&.P1)9++)+++!. P*)*,+)+++  Page 2 of 2  .B$nalonan Company #a' ore! P,)+++)+++ o# a''oun s re'e$a&le o ABC Company on0uly 1) *++,. Con rol as surren!ere! &y B$nalonan. ABC assesse! a #ee o# ,3 an!re a$ns a hol!&a'2 e:ual o *+3 o# he a''oun s re'e$a&le. In a!!$ $on ABC 'har%e!1*3 'ompu e! on a e$%h e! aera%e $me o ma ur$ y o# he re'e$a&les o# (+ !ays.1.B$nalonan Company $ll re'e$e an! re'or! 'ash o# a.P()9++);4,'. P()9,+)+++&.P()9++)+++!. P)9++);4,*.Assum$n% all re'e$a&les are 'olle' e!) B$nalonan Company<s 'os o# #a' or$n% here'e$a&les oul! &ea.P*,+)+++'. P8)(1,&.P*88)(1,!. P +,.On Sep em&er (+) *++,) As$n%an Company !$s'oun e! a he &an2 a 'us omer<sP,)+++)+++ ;/mon h 1+3 no e re'e$a&le !a e! 0une (+) *++,. The &an2 !$s'oun e! he no e a 1*3. The pro'ee!s #rom h$s !$s'oun e! no e amoun e! o a.P,)+8*),++'. P)4*)+++&.P,)*,+)+++!. P,)19+)+++;.=r!ane a Company a''ep e! #rom a 'us omer P,)+++)+++) 1*+/!ay) 1*3 no e !a e! Au%us (1) *++,. On Sep em&er (+) *++,) =r!ane a !$s'oun e! he no e a heNa $onal Ban2. >oeer) he pro'ee!s ere no re'e$e! un $l O' o&er 1) *++,. In heSep em&er (+) *++, &alan'e shee ) he amoun re'e$a&le #rom he &an2 $n'lu!esa''rue! $n eres reenue o# a.P*++)+++'. P)+++ &.P1,;)+++!. P +9.=m$n%an Company has a 1+3 no e re'e$a&le !a e! 0une (+) *++,) $n he or$%$nalamoun o# P8)+++)+++. Paymen s o# P()+++)+++ $n pr$n'$pal plus a''rue! $n eres are!ue annually on 0uly 1) *++;) *++9 an! *++4. In $ s 0une (+) *++9 &alan'e shee ) ha amoun shoul! =m$n%an repor as a 'urren asse #or $n eres on he no e re'e$a&le?a.P8++)+++'. P(++)+++&.P;++)+++!. P +4.Balun%ao Company a''ep e! a P,)+++)+++) *3 $n eres &ear$n% no e #rom RosalesCompany on De'em&er (1) *++,) $n e@'han%e #or a ma'h$ne $ h a l$s pr$'e o# P)+++)+++ an! a 'ash pr$'e o# P()9,+)+++. The no e $s paya&le on De'em&er (1)*++9. In $ s *++, $n'ome s a emen ) Balun%ao shoul! repor he sale a a.P()9,+)+++'. P,)+++)+++&.P)+++)+++!. P,)*++)+++8.On 0anuary *) *++, Tayo% Company sol! e:u$pmen $ h a 'arry$n% amoun o# P;),++)+++ $n e@'han%e #or P4)+++)+++ non$n eres &ear$n% no e !ue 0anuary *) *++4.There as no es a&l$she! e@'han%e pr$'e #or he e:u$pmen . The prea$l$n% $n eres ra e #or h$s no e on 0anuary *) *++, as 1+3. The presen alue o# 1 a 1+3 #or hreeper$o!s $s +.9,.1.In he *++, $n'ome s a emen ) ha amoun shoul! &e repor e! as $n eres $n'ome?a.P4++)+++'. P;;+)+++&.P;++)+++!. P9+)+++*.In he *++, $n'ome s a emen ) ha amoun shoul! &e repor e! as %a$n or loss onsale o# e:u$pmen ?a.P1),++)+++ %a$n'. P,++)+++ %a$n&.P 1++)+++ %a$n!. P,++)+++ loss - end -
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