Seller Corp. factored P400,000 of accounts receivable with Buyer, Inc., on a without-recourse basis. The factor charge was 1.75% of the amount of receivables, and an additional 4% was retained to cover probable adjustments. In addition to the factor charge, a finance charge was withheld equal to 12% annually for any amounts advanced prior to the due dates of the receivables. This charge was based on 100% of the face value. The average credit term was 30 days from the date of transfer. According to the terms of the factoring agreement, Seller was to handle returned goods, allowances, and shipping disputes. Buyer was to collect the cash and acknowledge sales discounts, but such discounts were to be charged to Seller. Credit losses were to be absorbed by Buyer. Seller has not recorded any bad debt expense related to the factored receivables. The following transactions pertain to this factoring arrangement:

Aug.   1	The receivable records were transferred to Buyer.
31	Buyer collected P234,000 during August after allowing for P9,000 of sales discounts. Sales returns and allowances during August totaled P2,400.
Sept. 20	Buyer wrote off a P2,000 account after learning of the company's bankruptcy.
30	Buyer collected P151,720 during September. Sales returns and allowances during September totaled P880.

Oct. 10

Seller and Buyer made a final cash settlement.

1. What net cash proceeds did Seller ultimately realize from the factoring?

a.   P389,000                                 c.   P380,000

b.   P385,720                                 d.   P376,720

2. What was the factor's net income from the factoring?

a.   P11,000                                   c.   P9,000

b.   P 3,280                                   d.   P2,000