A Company Sells a Particular Product Only in the Last

question 55

Multiple Choice

A company sells a particular product only in the last month of its fiscal year. The company uses commission agents for such sales and pays them 6% of their net sales 30 days after the sales are made. The agents' sales were $10 million. Experience indicates that 10% of the sales are usually not collected and 2% are returned in the first month of the new year. The auditor would expect the year-end balance in the accrued commissions payable account to be:

• A)$528,000.
• B)$540,000.
• C)$588,000.
• D)$600,000.