Horton Company Has the Following Accounts Receivable in Its General

question 37

Essay

Horton Company has the following accounts receivable in its general ledger at July 31: Accounts Receivable $32,000. During August, the following transactions occurred.
Aug. 1 Added 1% finance charges to $12,000 of credit card balances for not paying within the 30 day grace period.
15 Sold $20,000 of accounts receivable to Fast Factors Inc. who charge a 2% commission.
28 Collected $7,000 from Horton credit card customers including $350 of finance charges previously billed.
Instructions
(a) Journalize the transactions.
(b) Indicate the statement presentation of finance and service charges.

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Definitions:

Implicit Costs

Costs that represent the opportunity costs of using resources that the firm already owns, not involving direct monetary payment.

Explicit Costs

Direct, out-of-pocket expenses incurred in conducting an activity or business operation.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, indicating the financial gain in an economic activity.

Accountant

A professional who is responsible for keeping and interpreting financial records, ensuring accuracy and compliance with laws.