On June 9, 2022, U. U. B. Mason Company received three sales orders from customers. The sales
Question:
On June 9, 2022, U. U. B. Mason Company received three sales orders from customers. The sales orders were sent to the appropriate department for credit approval.
U. U. B. Mason Company's credit policy includes business rules that state:
All customer invoices are due within 30 days. Customer invoices are considered significantly past due when they are outstanding for more than 60 days.
Customers will be denied credit on new orders if:
1. The new order will cause the customer's account balance to exceed the customer's credit limit, or
2. The customer's account is classified as significantly past due.
Information relevant to the orders receive on June 9, 2022 reveals:
Customer | Order Amount | Credit Limit | Account Balance | 0-30 Days | 30-60 Days | Over 60 Days |
R.W Higgins and Co. | $12,700 | $30,000 | $22,000 | $22,000 | $0 | |
Acme Products | $7,800 | $20,000 | $5,900 | $5,400 | $500 | $0 |
Felicia Buyers Club | $5,200 | $25,000 | $9,500 | $6,000 | $2,000 | $1,500 |
WYDM Company | $9,500 | $12,000 | $3,400 | $0 | $0 | $3,400 |
Apply U. U. B. Mason Company's credit policy to approve or deny credit on each customer order. Indicate your determination by selecting the answer choice that best describes the appropriate decision and basis for that decision.
The order from R.W Higgins and Co., Acme Products, Felicia Buyers Club, and WYDM Company. Answer multiple choice for each company
A. The customer's order will be approved for credit.
B. The customer's order will be denied credit because the new order will cause the customer's account to exceed its credit limit.
C. The customer's order will be denied credit because the customer's account is significantly past due.
D. The customer's order will be denied credit because the new order will cause thecustomer's account to exceed its credit limit and the customer's account is significantly past due.
Auditing and Assurance Services An Applied Approach
ISBN: 978-0073404004
1st edition
Authors: Iris Stuart