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[Music] all right so let's talk about receivable financing focusing on assignment all right nepal nathan's overview now receivable financing i know by the receivable financing this is um to raise money or cash using our receivables specifically our trade receivables so it is not money or cash on companies so adding accounts receivable money um i pledging the other one is assignment and the other one is factoring so you're factoring um in a separate video okay on this video we are going to focus more on assignment [Applause] on account customer company accounts receivable so the customer owes the company and on the part of the company it's going to be the accounts receivable okay so accounts receivable new company customer yeah young times or cash to pay its obligations its current liabilities so it says my going on company i'm the company will borrow monies from the bank or other lending institutions or lending companies the company borrows money from the bank or other lending companies the company will characterize this specific accounts receivable from this customer all right so the assignment is specific accounts receivable [Applause] collateral okay accounts when this assignment is done the company becomes the assigner and the bank becomes the assignee see this because um some problems you might encounter not a company or a bank but a signer or assignee on gaga meeting so you should know who is a signer and who is assignee so the assigner is the company or other lending companies are they are called assignee all right now there are two ways to account for this assignment the non-notification basis and the notification basis support vital non-notification basis at notification basis so it's a non-notification basis is the company did not notify the customer of this assignment accounts receivable from that customer to the bank the company did not notify the customer about the assignment accounts receivable from that customer to the bank so the customer dance will still pay the company of this accounts receivable then the company will remit the collection to the bank all right so it's on notification basis the customer will continue to pay the company and the company will remit that collection to the bank okay so accounting or journal entries on this transaction under notification basis is company notifies the customer of the assignment [Applause] accounts receivable so the company will notify the customer of the assignment that the company collectorized accounts receivable as a customer so the customer then all right so then the customer will pay directly to the bank all right pays the bank and when the bank collects the money the bank will notify the company of the collections all right so this is your notification basis and non-notification basis so it will um overview nothing assignments all right transactions nato so what i'm gonna do is i will write down all the transactions on this side and i will make two columns for non-notification basis and notification basis at internal entries so you will see side by side on different kanilang journal entries all right ready all right now and journal entries number transactions involving the assignment okay now the first um transactions the first thing that we have to do on assignment is to transfer that accounts receivable account accounts receivable assigned all right so to transfer that collateralize accounts receivable to accounts receivable assigned our entry under non-notification basis and notification basis will be the same so our entry will be debit to accounts receivable assigned let's say for example we have one million of accounts receivable okay one million and we credit the accounts receivable of one million all right same thing with notification basis pare has acting adding uh journal entries so we debit accounts receivable assigned la laguna's account then we credit our accounts receivable of 1 million credit to accounts receivable to record the loan let's say for example the bank approved us a loan of 800 000 so we debit the cash let's say for example the bank charged as a service charge of 10 000 so 800 000 young in approved service charge so we will debit cash of 790 000 all right and debit to the service charge which is expense on the part of the company so we debit service charge then we credit our notes payable all right then we credit our notes payable of eight hundred thousand same thing with notification basis our entry will be the same we debit our cash of seven hundred ninety thousand debit service charger ten thousand and credit to notes payable of eight hundred thousands so that's our entry for notification basis but it has let's say for example there's a sales return one of the customer returned some goods to the company so final national record your sales returns accounts receivable nothing so we will debit sales return let's say for example maritime sales returned at ten thousand all right then we credit our accounts receivable assigned kasijan nanggali new sales return that then one of the customer accounts receivable return number goods so we debit the sales return of 10 000 and credit to accounts receivable assign all right so your sales return mode that is less to your sales to get your net sales same thing with notification basis but it has language entry capacitance sales returned so with debit sales return of ten thousand we credit accounts receivable of a sign of ten thousand one of the accounts receivable that we assigned let's say for example we have a worthless account of five thousand and a better worthless account only big seven hands worthless we cannot collect from that customer anymore so if if the account is worthless then we have to write it down from our accounts receivable assigned indeed and doubtful of collection but worthless account meaning to say we cannot collect from that customer anymore so we debit allowance for doubtful accounts let's say for example we have a 5 000 worthless of account and we credit accounts receivable assigned all right on notification basis pare has lang and acting and three so we debit allowance for doubtful accounts of five thousand and we credit the accounts receivable assign of five thousand all right another transactions that involves the assignment is sales discount so if there's any sales discount under non-notification basis and notification basis iii so to record our sales discount we debit our sales discount and we credit that accounts receivable assign all right let's say for example my own time sales discount of 15 000. so we debit our sales discount of 15 000 and we credit the accounts receivable assigned 15 000. on notification basis entry on sales discount so we debit our sales discount and we credit accounts receivable assigned of 15 000. so collection by the companies and non-notification bases remember on non-notification basis the company hindi and notify see customer about the assignment assignments receivable so therefore your customer will still pay the company so it's a collection and company and entering that is a non-notification basis is debit to cash in credit to the accounts receivable assigned all right now for example 900 000 so we debit cash of nine hundred thousand and credit to the accounts receivable assign and then the collection and companies and notification basis hindi applicable notification basis you company notifying young ions customer about the assignment about collateral accounts receivable so therefore you customer will pay the banks directly so si bank online now accounts receivable now basis on the other hand all right so remittance to the bank so we will debit our notes so we debit notes payable of eight hundred thousand remember 800 000 and we credit to cash of 800 000. the tournament's a notification non-notification basis collections okay so notification basis okay under notification basis 000 so our our entry now on notification basis will be debit to note payable of 800 000 and we debit our cash one hundred thousand yunnan one hundred thousand then we credit our accounts receivable assigned of nine hundred thousand under interest payment to the bank so [Applause] so our entry on the interest payment to the bank is debit to interest expense and credit to cash let's say for example we have uh eight thousand interest expense or interest in kaibanka so we debit interest expense of 8 000 and we credit to cash of 8 000. now we have the same entry on notification basis we debit interest expense of 8 000 we credit to cash of 8 000. after we pay paid off our notes payable [Applause] is a sign so to compute for the balance of our accounts receivable assigned computations nothing or calculations nothing all right so um calculate now accounts receivable assigned balance okay accounts receivable assigned so we will start with our accounts receivable assigned owner nothing in assigned accounts receivable or your amount so remember in the beginning we assigned 1 million passes so after that we will last our sales return so if you will remember our sales return is ten thousand so ten thousand and bina was nothing so i accounts receivable assigns from the transactions to record the sales return then we have our um sales discount remember our sales discount is fifteen thousand so we debit our sales discount and we credit our account receivable assigned after that we also have our worthless account you account let me write off so we have our worthless account and if you remember our worthless account is 5 000. then of course we will we have our collections accounts receivable in assignment is nine hundred thousand songs accounts receivable assigned i met on time balance i 70 000. all right this is your balance so our balance now the accounts receivable assign so satia accounts receivable assigned balance of seventy thousand so on gagging we will revert it back to the accounts receivable all right so our entry will be debited to accounts receivable of 70 thousands and we credit our accounts receivable a sign of 70 000. lecture nothing will be our receivable financing focusing on factoring all right factoring is a sale of your accounts receivable so i'll see you on the receivable financing [Music] factoring