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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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SOLUTION TO EXERCISE 8-4

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(b) The service charge expense incurred should be reported as a selling expense (operating expense) on the income statement because the company often sells its receivables. If receivables were sold infrequently, the service charge expense may be classified in the Other Expenses and Losses section of the income statement.

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