Question: Your accounts receivable clerk Mitra Adams to whom you pay

Your accounts receivable clerk, Mitra Adams, to whom you pay a salary of $1,500 per month, has just purchased a new Cadillac. You have decided to test the accuracy of the accounts receivable balance of $86,500 shown in the general ledger.
The following information is available for your first year in business:
1. Collections from customers are $198,000.
2. Merchandise purchased totalled $320,000.
3. Ending merchandise inventory is $99,000.
4. Goods are marked to sell at 40% above cost.
(a) Estimate 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.
(b) Discuss cash controls that can be implemented to prevent theft in this situation. Also discuss a cash control that can be implemented to detect any differences between the company's records of cash collected and cash actually received by the company.

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  • CreatedSeptember 18, 2015
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