(Receivables Management) As the manager of the accounts receivable department
for Beavis Leather Goods, Ltd., you recently noticed that Kelly Collins, your
accounts receivable clerk who is paid $1,200 per month, has been wearing
unusually tasteful and expensive clothing. (This is Beavis’s first year in
business.) This morning, Collins drove up to work in a brand new Lexus.
Naturally suspicious by nature, you decide to test the accuracy
of the accounts receivable balance of $192,000 as shown in the ledger. The
following information is available for your first year (precisely 9 months
ended September 30, 2014) in business.
(1) Collections from customers $188,000
(2) Merchandise purchased
merchandise inventory 90,000
(4) Goods are marked to sell at 40% above cost.
Assuming all sales were made on account, compute the ending
accounts receivable balance that should appear in the ledger, noting any apparent
shortage. Then, draft a memo dated October 3, 2014, to Mark Price, the branch
manager, explaining the facts in this situation. Remember that this problem is
serious, and you do not want to make hasty accusation