Question

Jim Carrie Company shows a balance of \(181,140 in the Accounts Receivable account on December 31, 2017. The balance consists of the following.

Installment accounts due in 2018	\)23,000
Installment accounts due after 2018	34,000
Overpayment to vendors	2,640
Due from regular customers, of which $40,000 represents account pledge as security for a bank loan	79,000
Advances to employees	1,500
Advance to the subsidiary company (due in 2018)	81,000

Instructions

Illustrate how the information above should be shown on the balance sheet of Jim Carrie Company on December 31, 2017.

Short answer

Item	Representation
Installment accounts due in 2018	Receivables
Installment accounts due after 2018	Receivables
Overpayment to vendors	Receivables
Due from regular customers, of which $40,000 represents account pledge as security for a bank loan	Receivables
Advances to employees	Receivables
Advance to the subsidiary company (due in 2018)	Investment

Step-by-step solution

Definition of Subsidiary Company

The company managed and controlled by another company or parent company is known as a subsidiary company. Such relation arises between two companies because of mergers and acquisitions.

Representation in the balance sheet

Particular	Amount $	Amount $
Receivables
Customer accounts	79,000
Installment accounts due in 2018	23,000
Installment accounts due after 2018	34,000
Vendors	2,640
Employees	1,500
Total receivables		140,140
Investment
Advance to subsidiary company		81,000