Horizon Outfitters Company includes in its trial balance for December 31 an item for Accounts Receivable $789,000. This balance consists of the following items: Due from regular customers $523,000 Refund receivable on prior year's income taxes (an established claim) 15,500 Travel advance to employees 22,000 Loan to wholly owned subsidiary 45,500 Advances to creditors for goods ordered 61,000 Accounts receivable assigned as security for loans payable 75,000 Notes receivable past due plus interest on these notes 47,000 Total $789,000 Illustrate how these items should be shown in the balance sheet as of December 31.
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Horizon Outfitters Company includes in its
| Due from regular customers | $523,000 | |
| Refund receivable on prior year's income taxes (an established claim) | 15,500 | |
| Travel advance to employees | 22,000 | |
| Loan to wholly owned subsidiary | 45,500 | |
| Advances to creditors for goods ordered | 61,000 | |
| Accounts receivable assigned as security for loans payable | 75,000 | |
| Notes receivable past due plus interest on these notes | 47,000 | |
| Total | $789,000 |
Illustrate how these items should be shown in the balance sheet as of December 31.
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