Question

Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of $1,725 per month, has just purchased a new Acura. You decide to test the accuracy of the accounts receivable balance of $94,300 as shown in the ledger.

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

(1)		Collections from customers		$227,700
(2)		Merchandise purchased		368,000
(3)		Ending merchandise inventory		103,500
(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		$

Answer 1

Accounts receivable, as per ledger = $94,300

Merchandise purchased = $368,000

Ending merchandise inventory = $103,500

cost of merchandise sold = Merchandise purchased- Ending merchandise inventory

= 368,000-103,500

= $264,500

Gross profit = 40% on cost

= 264,500 x 40%

= $105,800

Sales = cost of merchandise sold+ Gross profit

= 264,500+105,800

= $370,300

Collection from customers = $227,700

The ending balance of accounts receivable from customer = Sales - Collection from customers

= 370,300-227,700

= $142,600

Apparent shortage = The ending balance of accounts receivable from customer - Accounts receivable, as per ledger

= 142,600-94,300

= $48,300

The ending balance of accounts receivable from customers		$142,600
Apparent shortage		$48,300