Which of the following responses from customers, regarding their accounts receiv

Question

Which of the following responses from customers, regarding their accounts receivables balances on December 31st 2013 requires an adjustment to accounts receivable?

a. “I paid the $500 balance on December 28th” (you have verified this with January cash receipts)

b. “We have a voucher system and can’t verify the balance”

c. “Please note that our balances should be $500 lower, because we returned goods totaling $500, which, according to our records, were received by you on January 5th 2014”

d. “We have filed for bankruptcy protection on January 2nd 2014 and don’t have the funds to pay this balance.”

Explanation / Answer

Answer is a. “I paid the $500 balance on December 28th” (you have verified this with January cash receipts) $500 balance to be reduced from the accounts receivable. In situation b. not able to verify balance,no adjustment required. In C. Returned goods are received after balance sheet date (December 31st 2013 ).No adjustment required in 2013. In d.filed for bankruptcy protection on January 2nd 2014 which is after balance sheet date.No adjustment required in 2013.

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