E7-4B (Determine Ending Accounts Receivable) 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 year in 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
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.
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