1. Pittance Company provided the following information in connection with a bank loan.

March 1 Pittance Company borrowed P2,000,000 from bank on a six month note carrying an interest of 12% per annum. Accounts of P3,000,000 are pledged to secure the loan.

April 1 Pledged accounts of P1,000,000 are collected minus 2% discount

June 1 The remaining pledged accounts are collected.

September 1 The bank loan is repaid plus interest.

REQUIRED:

Prepare journal entries to record transactions.

2. Decile Company assigned certain accounts receivable to a bank for a loan on the following basis: 75% cash advance, 4% service charge on gross accounts assigned, 2% interest per month is to be charged, and the bank makes the collections. The entity signed a promissory note for the loan.

July 1 Received remittance upon the specific assignment of P1,500,000 in accounts to the bank.

August 1 Received notice from bank that P800,000 of the assigned accounts were collected. A Check was sent to the bank for one month interest charge.

September 1 Received notice from bank that assigned accounts of P500,000 were collected in full and the remaining accounts of P200,000 were being turned. Accordingly, a check was received from the bank in settlement of the assignment contract. In making the settlement, the bank deducted the interest charge for the corresponding period.

REQUIRED:

Prepare journal entries on the books of the assignor.

3.Sober Company sold accounts receivable without recourse for P5,300,000. The entity received P5,000,000 cash immediately from the factor. The remaining P300,000 will be received once the factor verifies that none of the accounts receivable is in dispute. The accounts receivable had a face amount P6,000,000. The entity had a previously established an allowance for bad debts of P250,000 in connection with these accounts.

REQUIRED:

Prepare journal entries to record the factoring of accounts receivable.