How much is the total proceeds received by Violet Company

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Reference no: EM132923821

Question - Violet Company showed the following balances on December 31, 2019:

Accounts receivable-unassigned 1,000,000

Accounts receivable-assigned 300,000

Allowance for doubtful accounts-January 1 30,000

Receivable from factor 40,000

Note Payable-bank 240,000

During the current year. Violet Company found itself in financial distress and decided to resort to receivable financing. On June 30, Violet Company, factored P200,000 of its accounts receivable to a finance company. The finance company charged a factoring fee of 5% of the accounts factored and withheld 20% of the amount factored.

On December 31, Violet Company assigned P300.000 of its accounts receivable to a bank under a non-notification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned Violet Company signed a promissory note for the loan On December 31, it is estimated that 5% of the outstanding receivable may prove uncollectible. How much is the total proceeds received by Violet Company from the receivable financing (assignment and factoring)?

a. P225,000

b. P375,000

c. P390,000

d. P500,000

Reference no: EM132923821

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