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AlladinOne [14]
2 years ago
14

Popper Enterprises factors $900,000 of its accounts receivable to Third Bank with recourse for a finance charge of 5​%. The fina

nce company retains an amount equal to​ 7% of the accounts receivable for possible adjustments. Third Bank will return the hold back to Popper when it collects the receivables. In​ addition, the fair value of the recourse liability is estimated at​ $20,000. What amount of cash would Popper receive as a result of this​ transaction
Business
2 answers:
damaskus [11]2 years ago
6 0

Answer:

$972000

Explanation:

Account receivables factored = $ 900,000

Recourse Liability = $ 20,000

Due from Factor Third Bank = 900000 x 7% = $ 63,000

Loss from Factoring = (900000 x 5%) + 20000 recourse liability = $ 65,000

Amount of cash received as a result of this factoring transaction = Accounts receivables factored + Recourse Liability – Loss on factoring – Due from factor.

= 900000 + 20000 – 63000 – 65,000 = $972,000

wolverine [178]2 years ago
4 0

Answer:

<em>The answer is $972,000</em>

Explanation:

<em>From the question we recall the following,</em>

<em>The account receivable of  popper Enterprises factors = $900,000</em>

<em>Recourse for finance charge of = 5%</em>

<em>The accounts receivable for possible adjustments of =7%</em>

<em>The fair value of the recourse liability of  = $ 20,000</em>

<em>Then,</em>

<em> From Factor Third Bank = 900000 x 7% = $ 63,000</em>

<em>The  Factoring  Loss = (900000 x 5%) + 20000 of the recourse liability = $ 65,000</em>

<em>which is,</em>

<em>The Amount of cash that popper would received as a result of this transaction is = Accounts receivables  + the value of recourse liability from  factoring loss  – the factor due</em>

<em>Therefore,</em>

<em>= 900000 + 20000 – 63000 – 65,000 = $972,000</em>

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