Your accounts receivable clerk, Ms. Oommen, to whom you pay a salary of $6,500 per month, has just purchased a new Cadillac. You decided to test the accuracy of the accounts receivable balance of $87,000 as shown in the ledger.
The following information is available for your first yearin business.
(1) Collections from customers $203,000
(2) Merchandise purchased 325,000
(3) Ending merchandise inventory 95,000
(4) Goods are marked to sell at 50% above cost
Instructions:
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.