[Anonymous]

Ok….I am working on the supplementary questions for B3. I am having trouble understanding the solution to question CPA-04079. I don’t want to post the question (I don’t think I am allowed to). I am hoping a fellow Becker student might be able to help me out. Why are they multiplying by the monthly rate for 2% but not the 10%? Shouldn’t they both be converted to the monthly rate? What am I doing wrong? Or is their solution wrong?

[kb24]

I was searching for BEC questions and comments and saw your post. I know you probably don't care anymore, but this question is also something you'll see when reviewing FAR. There are two % charges associated w/ factoring. One is the rate charged for the firm being able to collect the money early (this is the 10%). You'll notice it's multiplied times the money received rather than the total amount of A/R. The second is a factoring fee which is a charge based upon the factor's anticipated bad debt losses (this is the 2%) and it's multiplied times the whole amount of A/R.

FAR 4/1/11 - 89
AUD 4/15/11 - 85
REG 4/29/11 - 80
BEC 5/13/11 - 85

[Author]

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