Lynn Company Has Accounts Receivable of $54000 in Its General

question 169

Essay

Lynn Company has accounts receivable of $54000 in its general ledger at July 31: During August the following transactions occurred.
Aug. 1 Added 1% finance charges to $15000 of credit card balances for not paying within the 30 day grace period.
15 Sold $28000 of accounts receivable to Coal Factors Inc. who charge a 3% commission.
28 Collected $6000 from Lynn credit card customers including $300 of finance charges previously billed.
Instructions
(a) Journalize the transactions.
(b) Indicate the statement presentation of interest revenue and service charges.

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Definitions:

Direct Labor Hour

A direct labor hour is a measure of the amount of time a worker spends directly manufacturing a product or providing a service, often used to allocate labor costs in production.

Finishing Department

The final phase in a manufacturing process where products undergo final touch-ups, quality assurance checks, and packaging.

Overhead Rate

A measure used to allocate indirect costs to produced goods or services, based on a particular formula or base.

Activity-Based Costing

An accounting technique that assigns costs to units based on the activities needed to produce or deliver them, enhancing costing accuracy.