What is the total cash generated by kuwait company

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Reference no: EM132742898

On its second year, Kuwait, Inc. thought of expanding its business. In order to generate additional cash necessary for this expansion, the company on September 1, 2011, factored P200,000 of accounts receivable to Kinshasa. Factoring fee was 10% of the receivables purchased. Kinshasa Company withheld 5% of the purchase price as protection against sales returns and allowances. On November 2, 2011, accounts amounting to P500,000 was assigned to Lilongwe Bank as a collateral on a P300,000, 20% annual interest rate loan. A 3% finance charge was deducted in advance.

As of December 31, 2011, data relating to accounts receivable follows:

Allowance for doubtful accounts - credit P 6,700

Estimated uncollectible as a percentage of accounts receivables 2%

Accounts receivable excluding factored and assigned accounts 95,000

Collections on assigned accounts None

Problem 1. What is the total cash generated by Kuwait Company from factoring and assigning the accounts receivable?

Problem 2. What is the bad debts expense to be recognized by Kuwait Company in 2011?

Reference no: EM132742898

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