Explore BrainMass

Explore BrainMass

    Tiny Company: Compute the balance of accounts receivable

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The following information from Tiny Company's first year of operations is to be used in testing the accuracy of Accounts Receivable. The December 31, 2008, balance is $28,300.

    (a) Collections from customers, $48,000.
    (b) Merchandise purchased, $74,000.
    (c) Ending merchandise inventory, $31,500.
    (d) Goods sell at 60% above cost.
    (e) All sales are on account.

    Compute the balance that Accounts Receivable should show and determine the amount of any shortage or overage.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:46 pm ad1c9bdddf

    Solution Preview

    For your convenience, I have attached a formatted MS Excel spreadsheet containing the text below.

    Calculate Cost of Goods Sold (COGS) from the provided information:

    Merchandise purchased $74,000
    Ending inventory $31,500
    Cost of Goods sold (COGS) $42,500

    Calculate Sales Revenue, which from the provided information (d) is 60% above COGS
    Total Sales Revenue = COGS + .60(COGS)
    Total ...

    Solution Summary

    Excel spreadsheet shows how to compute the accounts receivable balance and determine shortages for Tiny Company.