The balance in Accounts Receivable was $ 650 comma 000 at the beginning of the year and $ 770 comma 000 at the end of the year. Credit sales for the year totaled $ 4 comma 120 comma 000. During the year, $ 420 comma 000 in customer accounts were written off. How much cash was collected from customers during the period?

Question

Business

Valenzuela

22 May, 03:53

The balance in Accounts Receivable was $ 650 comma 000 at the beginning of the year and $ 770 comma 000 at the end of the year. Credit sales for the year totaled $ 4 comma 120 comma 000. During the year, $ 420 comma 000 in customer accounts were written off. How much cash was collected from customers during the period?

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Hubbard · Answer 1

Cash collected from customers during the period amounts to $3,580,000

Explanation:

The account receivables balance increases as credit sales are made. The balance also decreases when debts go bad.

These two are represented as debits to accounts receivable and credit to sales and credit to account receivables and debit to bad debt expense. Furthermore, when cash is collected, the receivables balance also decreases (debit cash credit receivables).

Let the amount of cash collected be Y

650,000 - Y + 4,120,000 - 420,000 = 770,000

Y = 650,000 + 4,120,000 - 420,000 - 770,000

Y = $3,580,000