A Company Sells a Particular Product Only in the Last

question 91

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.
• #10,000,000 x 98% = $9,800,000 Net Sales x 6% commission percentage = $588,000 estimated accrued commissions payable.

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Definitions:

Highly Superior Autobiographical Memory

An extraordinary ability to recall one's personal past events in great detail.

Amnesia

Partial or total loss of memory.

Implicit Memory

A type of memory that is unconsciously and effortlessly retrieved, affecting thoughts and behaviors, including skills and conditioned responses.

Explicit Memory

Conscious memory: subjects can retrieve an item and indicate that they know the retrieved item is the correct one.