Final answer:
On the seller's books, a sale on an account for $190,000 would be recorded as a debit to Accounts Receivable and a credit to Sales Revenue. Using the provided reference information, the accounting profit for the firm would be calculated at $50,000, after subtracting explicit costs from total revenues.
Step-by-step explanation:
When a sale on account for $190,000 is made, it will appear on the seller's books as an increase in Accounts Receivable and an increase in Sales Revenue. The journal entry to record this transaction would be a debit to Accounts Receivable for $190,000 and a credit to Sales Revenue for the same amount. This reflects that the company is expecting to receive money in the future for a sale that has been made.
The calculation of the firm's accounting profit from the reference information provided would be as follows:
- Total sales revenue is $1,000,000.
- Explicit costs, which include labor, capital, and materials, amount to $950,000 ($600,000 + $150,000 + $200,000).
- Accounting profit is then calculated by subtracting explicit costs from total revenues, resulting in an accounting profit of $50,000 ($1,000,000 - $950,000).