Question

At the beginning of January of the current year, Sorrel Co.’s ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

Multiple Choice

• $49,300.

• $54,300.

• $49,700.

• $2,300.

• $54,700.

Answer 1

Answer:

Determination of the balance in the accounts receivable account:

Particulars	Amount
Beginning balance of accounts receivable	$52,000
Less: Amount collected from customers	($14,800)
Add: Services provided to customers on account	$12,500
Ending balance of accounts receivable	$49,700

Note: During January one customer paid Mikey $5,000 for services to be provided in the future & therefore, Cash account should be debited & unearned revenue should be credited & it does not affect the accounts receivable account.

Therefore, option (C) i.e. $49,700 is the correct answer.