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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 $132,000 as shown in the ledger. The following information is available for your first year (precisely 9 months ended September 30, 2010) in business. Collections from customers .......................$188,000 Merchandise purchased................................360,000 Ending merchandise inventory........................90,000 Goods are marked to sell at 40% above cost. Assuming all sales were made on account, compute the ending balance that should appear in the ledger, noting any apparent shortage. What would you do with this information?
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