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RECEIVABLES FINANCING, ACCOUNTING FOR LOAN RECEIVABLE AND ACCOUNTING FOR RECEIVABLE IMPAIRMENT

W WW W 1. On December 1, 2016, Hawkeye Company's trade receivables account balance was P8,000,000 while the allowance for bad debts was P2001100. It assigned P4,500,000 to Clint Financing Company as a security for a loan. The loan amount of P3000000 carries an interest rate of 9%. Clint Financing Company charges a 3% service fee based on the amount borrowed. Credit sales from November 1 to December 31. 20115 totaled P2000003. Total collections from credit customers during the same period amounted to P4.100.000. of which P1300000 were from the assigned accounts. Hawkeye Company remitted the collections of the assigned accounts to Flint Financing Company plus accrued interest by the end of 2016. Theallowance for uncollectible accounts is based on 4% of the receivables balance 3. Prepare the entries in relation to the accounts receivables lor the period November 1 to December 31, 2016. h The Trade and other receivables reported in the December 31 . 2016 statement of linancial position is c. The "equity over the assigned accounts" at December 31, 2016 is 2. On December 1. 2016. Wonder Woman Company used receivables totaling P2300000 as a collateral on a P1.400.000. 3% note from Diana Bank. Diana Bank also receives a 1.25% service charge. deducted in advance on the loan amount. Assigned accounts collected in December amounted to P515,000 in 'W'1'11Ch discounts of P35.000 were granted. On December 31 , 2016 1Wonder Woman Company remitted the December collections to Diana Bank. The amount was initially applied to accrued interest and the balance to the loan 3. Prepare the entries in relation to the accounts receivables h The \"equity over the assigned accounts" at December 31. 2016 is 3. Black Widow Company finances some of its current operations by assigning accounts receivable on a notification basis to Natasha Finance. On July 1. 2016. it assigned. under guarantee, specific accounts amounting to P4000000. Natasha Finance shall advance to Black Widow Company 80% of the accounts assigned, less a finance charge of 2% of the total accounts assigned. On July 31 , Black Widow Company received a statement that Natasha Finance had collected P2200000 of these accounts. and had made an additional charge of 2% of the total accounts outstanding as of July 31. This additional charge shall be deducted from the remittance due to Black Widow Company from Natasha Finance. On august 31 . Black Widow Company received a statement that Natasha Finance together with a check for the amount due. 1he statement indicated that Natasha Finance collected an additional P1250000 and has make a further charge of 2% of the balance outstanding as of August 31 . 3. Prepare the entries in relation to the accounts receivable h The amount of the check received from Natasha Finance on August 31 13. On August 31, 2016, War Machine Company discounted with recourse a customer's note at its bank at a discount rate of 12%. The note received from the customer on August 1, 2016, which is for 90 days, has a face amount P4,000,000 and carries a rate of 8%. The customer paid the note to the bank on October 30, 2016, the date of maturity. War Machine Company accounted the note discounting as a secured borrowing. a The amount of cash received from discounting the note receivable b. The amount of loss reported on the note receivable discounting is 14. On December 31, 2016, Firestorm Company has an outstanding note from Ronnie Company having a face amount of P3,000,000, a stipulated interest rate of 10% and a scheduled maturity date of December 31, 2016. Ronnie Company which was currently under severe financial stress, failed to pay interest in 2016 and requested for the following concessions: a) waiver of the 2016 interest b) extension of the maturity date to December 31, 2019; c) reduction in principal to P2,800,000 and d) reduction of the interest rate to 9% a Impairment loss in 2016 b. Receivable balance as reported in the December 31, 2017 balance sheet C. Interest income for 2018 15. Vision Bank loaned Jarvis Company P4,000,000 on January 1, 2014. The terms of the loan were payment in full on January 1, 2017 plus annual interest payment at 12%. The interest payment was made as scheduled on January 1, 2015. However, due to financial setbacks, Jarvis Company was unable to make its 2016 interest payment. Vision Bank considers the loan impaired and projects the cash flows from the loan on December 31, 2016. Vision Bank accrued the interest at December 31, 2015, but did not continue to accrue interest for 2016 due to the impairment of the loan. The project cash flows are: December 31 2016 2017 2018 2019 500,000 800,00 1,200,000 1,500,000 The present value of 1 at 12% is as follows: One period Two periods Three periods Four periods 0.89 0.80 0.71 0.64 a The loan impairment loss on December 31, 2016 b. The interest income to be reported by Vision Bank in 2017 16. On January 1, 2016 Hawk girl Company granted a 10% 3-year, P200,000 loan to Shiera Company. Origination fees incurred and charged to the borrower amounted to P21,814. Direct origination cost to Hawk girl Company amounted to P12,207. The effective rate of the note after considering the origination fees was 12%. a The interest income for 2016 is b. The carrying amount of the loan at December 31, 2016 is