CPA REVIEW SCHOOL OF THE PHILIPPINES
Manila
FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/SANTOS
MAY 2025 LECPA BATCH 97
RECEIVABLE FINANCING
1. On December 1, 2025, an entity assigned on nonnotification basis specific accounts receivable totaling
P4,000,000 as collateral on a P3,000,000, 12% loan from a certain bank. In addition to the interest on the
loan, the bank also charged a 5% finance fee deducted in advance on the P3,000,000 loan evidenced by
a promissory note.
The December collections of assigned accounts receivable amounted to P2,000,000 less cash discounts
of P100,000. On December 31, 2025, the entity remitted the collections to the bank in payment for the
interest accrued on December 31, 2025 and the balance for the payment of the note payable.
The entity accepted sales returns of P150,000 on the assigned accounts and wrote off assigned accounts
of P200,000.
I. The cash received from the assignment of accounts receivable amounted to P2,800,000
II. The carrying amount of the note payable should be reported at P1,100,000 on December 31, 2025
III. The accounts receivable assigned should be reported at P1,650,000 on December 31, 2025.
IV. The entity should disclose equity in assigned accounts on December 31, 2025 at P520,000.
A. All statements are not true
B. Only statements III and IV are true
C. All statements are true
D. Only statements I and III are true
2. An entity factored P6,000,000 of accounts receivable to a finance entity at the end of the current year.
Control was surrendered by an entity. The transaction met the criteria to be accounted for as sale but
subject to recourse for nonpayment. The fair value of the recourse obligation is P250,000.
The factor assessed a fee of 3% and retained a holdback equal to 5% of accounts receivable. In addition,
the factor charged 15% interest computed on a weighted average time to maturity of the accounts
receivable of 54 days.
1. What amount was initially received from the factoring of accounts receivable?
A. 5,296,850
B. 5,386,850
C. 5,476,850
D. 5,556,850
2. What total amount should be recognized initially as loss on factoring?
A. 863,150
B. 563,150
C. 180,000
D. 430,000
3. If all accounts are collected, what amount should be reported as loss on factoring the accounts
receivable?
A. 313,150
B. 180,000
C. 433,150
D. 613,150
7381
Assignment-non notification -custometheentity
2 , 850 , 000
False
1, 440 , 000
False
Tre
iMe AR
-
assigned 1 , 650 , 000
up-bank 1: 130 , 000
121/125 52k
AR-assigned 4M
AR 4M
Loan Payable AR-assigned Cash 2 850, 00
,
3M 4M
2M Finance Fee 12Mxs]) 150K
1, 870 000 Loan
350K 3M
,
Payable
1, 130 ,000 1 , 450,, 000 12131/25 1 9M
.
casn look
CD
AR-
IM
assigned
30K
Interest Exp(aMX 12 x'/12)
.
1 , 870 ,000
Loan payable
1 9M
Cash .
Sales Return 150K
ADA 200K
Factoring ,
wirecourse AR-assigned 350K
assigned
365
days
um
Service Fee (150K) (6MX 03)
O
.
I
Factors (4MX 05)
Holdback
1300K) .
Interest (13 150)
, (GMX 15 .
x)
5 , 386 , 849
loss on
250K
recourse Cash 5 , 786, 858
Hee 180K rever back
Due from factor 300K
O Interest + 133, 150
o58
to factor if no sales return/ allowance
Financetee
slexp that reduced it , not an expense receivable)
Loss 543 , 150 250K
Loss on Recourse
AR um
Recourse Liab 25017
Recourse Liab 250K
⑧ Manc In a Loss
on Recourse 250K
Page 2
Discounting , with recourse, conditional sale
3. An entity accepted from a customer a P4,000,000, 90-day, 12% interest-bearing note dated August 31,
2025. On September 30, 2025, the entity discounted the note with recourse at the Apex State Bank at
15%. The discounting with recourse is accounted for as a conditional sale with recognition of a
contingent liability. Do not include date of
the note
90
Total
1. What amount was received from the discounting of note receivable? less: Expired
Principal 4M
O
A.
B.
4,017,000
4,120,000
Interest (4Mx . 12 x 90/360) 120k
4, 120, 000
Sep
Aug(31-31) ⑧
38 38
MV
x 15x 60/360) (103K)
C. 4,103,000 Discount (4 120 00, ,
60
4 , 017, 000
D. 3,965,500 Net Proceeds
Cash 4 , 017 00
2. What is the loss on note receivable discounting? 231
,
Loss on Discountin
A. 40,000 Cl of
ARancipal UM ur discounted PM
8
B. 23,000 Interest Income (4MX 1x .
30/340)
40K Interest Income 40K
C. 17,000 (4 045
, , 000)
D. 20,000 Net proceeds 4 ,017 ,000
Loss on Discounting (231)
3. If the discounting is secured borrowing, what is included in the journal entry to record the
transaction? gain/loss no
Cash 4 017 00 , ,
A. Debit interest expense P23,000 Interest Exp -
23K
B. Credit liability for note discounted P4,000,000. Liability For PR Discountel 4M
401
C. Credit interest income P40,000 Interest Income
E
D. All of these are included in the journal entry
4. On April 1, 2025, an entity discounted with recourse a 9-month, 10% note dated January 1, 2025 with
face amount of P8,000,000. The bank discount rate is 12%. The discounting transaction is accounted for
as a conditional sale with recognition of contingent liability.
On October 1, 2025, the maker dishonored the note receivable. The entity paid the bank the maturity
value of the note plus protest fee of P200,000.
On December 31, 2025, the entity collected the dishonored note in full plus 12% annual interest on the
total amount due. COC-Decil
TMe I. The cash received from discounting of note receivable amounted to P8,084,000.
False II. The loss on note receivable discounting should be reported at P516,000 116k
Tre III. Notes receivable discounted with recourse should be excluded from total receivables with disclosure
of contingent liability
False IV. The cash collected from customer on December 31, 2025 amounted to P8,800,000
A. All statements are true. Principal SM April 1 , 2025
8 084,000
10x9/12) Cash
,
ARISM 600K
B. Only statements I, II and III are true Loss on Discounting 114k
MV 8 UM
C. Only statements I and III are true
.
Less: Discount VR Discounted OM
D. Statement I is not true. (8 UMX.
.
12 x 1/2) (516k) Interest Income 2001)
Net 8 , 084 000,
Proceeds
XS
Oct.
CA OF AR End AR 8 8M
.
(8 UM +
.
200K)
Principal &M 8 OM
cash .
Whatever paid to
Interest
Income 200K bank will be
(8 ,200 ,000) NR Discounte &M
(8Mx 10 X .
collected from customer
3/12)
Loss on (1101) NR SM
Discounting
Dec 3) .
9 064 , 000
18 800, 00 + 18 8MX
. .
12x3/1)
Cash
.
,
Oct-Dec
AR 8 8M
balancing
.
Figure
InterestIncome 264k
7381
