Your accounts receivable clerk, Mary Herman, to whom you pay a salary of $1,500

Question

Your accounts receivable clerk, Mary Herman, to whom you pay a salary of $1,500 per month, has just purchased a new Buick. You decided to test the accuracy of the accounts receivable balance of $117,000 as shown in the ledger. The following information is available for your first year in business.
(1) Collections from customers $198,000
(2) Merchandise purchased 320,000
(3) Ending merchandise inventory 70,000
(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.

Cost of good sold $
Apparent shortage $

Explanation / Answer

Merchandise purchased                            $320,000
Less: Ending Inventory                              $70,000
Cost of goods sold                                $250,000
Total Credit sales $250,000 x 140%    $350,000
Less : Collections                                    $198,000
Ending Accounts Receivables balance       $152,000
Less : Amounts shown in A/R Ledger       $117,000
Shortage                                                $35,000
                                                          =========

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.