Problem 4

MXC Company is a retailer. Its entered into a continuing agreement with SHN Financing Corporation to factor its accounts receivable to the latter. They agreed on the following:

Credit terms is 5/10, n/30

5% commission to SHN based on the gross amount of the accounts receivable

20% of the gross uncollected accounts receivable will be withheld by SHN

Returns by customers will be honored During April 2020, the following transactions took place relating to said agreement:

April 14 MXC sold goods on account to NVG Company, P300,000 and accounts were immediately factored by SHN.

April 16 MXC sold goods on account to MXG Company, P200,000 and accounts were immediately factored by SHN.

April 18 NVG returned goods amounting to P20,000.

April 20 NVG paid in full. April 25 MXC sold goods on account to AFN Company, P600,000 and accounts were immediately factored by SHN.

April 26 AFN paid in full.

Prepare the journal entries and compute the balance of the account Receivable from Factor on April 30, 2020 by using a T-account.