Tiny Company: Compute the balance of accounts receivable
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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.
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Solution Summary
Excel spreadsheet shows how to compute the accounts receivable balance and determine shortages for Tiny Company.
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 ...
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