In each issue of Wharton Magazine, we’ll test your knowledge with a question taken straight from an actual Wharton course exam. Submit the correct answer and you might just walk off with a great prize—a Wharton Executive Education program.
This issue’s cheesesteak-themed Final Exam challenge comes from Wayne Guay, the Yageo Professor of Accounting.
Good luck!
The Basics:
A Philadelphia-based analyst is trying to determine how much cash Pat’s King of Steaks collected from its customers in 2009. Most of Pat’s customers pay in cash, but the restaurant also caters functions for local businesses that pay on credit terms. Consider first the following financial information about Pat’s:
Balance sheet
12/31/09 12/31/08
Accounts Receivable 83,318 67,681
Less: Allowance for Doubtful Accounts 2,878 2,363
Net Accounts Receivable 80,440 65,318
Additional info:
Gross Sales (including cash sales and sales on account) = 826,641
Bad Debt Expense = 3,520
Write-Offs of A/R = 3,005
The Question: How much total cash was collected from Pat’s customers in 2009?
The Answer: $807,999 in cash collected from customers
Thanks to everyone who participated! Our winner will be notified shortly. We’ll have another Final Exam challenge in our Summer issue.
