Question
ABC Co. factored 100,000 accounts receivable to XYZ Financing Corp. on a without recourse basis on January 1, 20x1. XYZ charged a 4% service fee
ABC Co. factored 100,000 accounts receivable to XYZ Financing Corp. on a without recourse
basis on January 1, 20x1. XYZ charged a 4% service fee and retained a 10% holdback to cover
expected sales returns. In addition, XYZ charged a 12% interest computed on a weighted average
time to maturity of the receivables of 73 days based on 365 days.
5. How much proceeds is received from the factoring on January 1, 20x1?
6. How much is the cost of factoring assuming all of the receivables have been collected?
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Managerial Accounting
Authors: James Jiambalvo
4th edition
9780470546888, 9780470333341, 470546883, 470333340, 978-0470578797
