Exercise 7-4 Your accounts receivable clerk, Mitra Adams, to whom you pay a sala

Question

Exercise 7-4 Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of $3,735 per month, has just purchased a new Acura. You decided to test the accuracy of the accounts receivable balance of $291,330 as shown in the ledger. The following information is available for your first year in business. (1) Collections from customers $493,020 (2) Merchandise purchased 796,800 (3) Ending merchandise inventory 174,300 (4) Goods are marked to sell at 40% above cost Compute an estimate of the ending balance of accounts receivable from customers that should appear in the ledger and any apparent shortages. Assume that all sales are made on account. The ending balance of accounts receivable from customers $ Apparent shortage $ Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Cost of goods sold=$796,800-$174,300=$622,500

Sales=$622,500*40%+$622,500=$871,500

Accounts receivabe=$871,500-$493,020=$378,480

The ending balance of accounts receivable from customers $ Apparent shortage=$378,480-$291,330=$87,150

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