Question

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 customer	\)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
Advance to creditor for goods ordered	61,000
Accounts receivables assigned 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.

Short answer

Accounts receivables total$598,000.

Step-by-step solution

Definition of Subsidiary Company

The subsidiary company can be defined as the company controlled and managed by another company known as the parent company. Such a company is acquired through mergers and acquisitions.

Balance Sheet

Particular	Amount $
Current assets
Accounts receivables ($523,000+75,000$)	$598,000
Refund receivable on income taxes of the previous year	15,500
Advance for goods ordered	61,000
Non-Trade receivables
Advances to a wholly-owned subsidiary	$45,500
Other Current assets
Travel advances to employees	22,000
Note receivables plus accrued interest	47,000
Total Current assets	$789,000