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factoring receivable

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › factoring receivable

  • This topic has 2 replies, 3 voices, and was last updated 8 months ago by ilham9089.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • May 27, 2022 at 1:50 am #656529
    komalimad22
    Member
    • Topics: 7
    • Replies: 2
    • ☆

    I’m having trouble understanding factoring receivables. I have a question on this, can you look at this? thanks.

    A factor will buy company’s receivables (Rs.8 million per month), which have a collection
    period of 60 days. The factor shall advance up to 80 percent of face value of the receivables
    at 8% on an annual basis. The factor shall also charge 1.5% fee on all receivables purchased.
    It has been estimated that the factor’s services will save the company a credit department
    expense and bad-debt expense of Rs 92,000 per month.

    explain
    1.Who is giving interest to whom? and calculation of interest.

    mine solution is

    fee (8000000*1.5%*12) 1440,000
    interest(8,000,000* 80% * 8%) 512000
    bad debt (92,000 * 12) (1104,000)

    is it correct ??? or interest amount also multiplied by 12???

    May 30, 2022 at 5:42 pm #656897
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    How does your solution compare to the one given in the notes that you have? Happy to explain if your answer is different to that in your notes.

    Thanks

    June 2, 2022 at 5:19 pm #657157
    ilham9089
    Participant
    • Topics: 237
    • Replies: 171
    • ☆☆☆

    Isn’t this a Financial Management question?

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    Posts
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