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 $3,510 per month, has just purchased a new Acura. You decided to test the accuracy of the accounts receivable balance of $273,780 as shown in the ledger.

The following information is available for your first year in business.

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.

Explanation / Answer

Account receivable balance

A) Goods sold= (Inventory purchased- Ending inventory balance)=(748,800-163,800)*140%=$819,000

B) Collections from customers                  =$463,320

C) Balance                                                =$355,680

Apparent Shortage = $355,680-$273,780= $81,900

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