Fernandez Company had an accounts receivable balance of $150,000 on December 31, Year 2 and $175,000 on December 31, Year 3. The company wrote off $40,000 of accounts receivable during Year 3. Sales for Year 3 totaled $600,000, and all sales were on account. The amount collected from customers on accounts receivable during Year 3 was:

Question

Kirsten Escobar

Business

22 October, 17:42

Fernandez Company had an accounts receivable balance of $150,000 on December 31, Year 2 and $175,000 on December 31, Year 3. The company wrote off $40,000 of accounts receivable during Year 3. Sales for Year 3 totaled $600,000, and all sales were on account. The amount collected from customers on accounts receivable during Year 3 was:

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Answers (2)

Know the Answer?

Avah · Answer 1

The amount collected from customers on accounts receivable during Year 3 was $535,000

Explanation:

Open a Total Trade Receivables Account and establish the cash collection amount from the Balancing figure as Follows:

Debits:

Opening Accounts Receivable Balance $150,000

Sales for the Year (All on Account) $600,000

Totals $750,000

Credits:

Closing Accounts Receivable Balance $175,000

Doubtful Debts Written Off $40,000

Cash (Balancing figure) $535,000

Totals $750,000

August Taylor · Answer 2

The amount collected from customers on accounts receivable during year 3 is $535,000.

Explanation:

Cash received from accounts receivable = Opening balance of AR + Credit Sales - Bad debts written off - Closing balance of AR.

The opening balance for year 3 account receivables was 150000. Credit Sales = 600000 Bad debts = 40000 Closing Balance = 175000

We can solve this question either by making a T account for accounts receivable or using the equation given above.

Cash = 150000 + 600000 - 40000 - 175000 = $535000