Question

Assume that the accounts receivable account had a beginning balance of $200 and an ending balance...

Assume that the accounts receivable account had a beginning balance of $200 and an ending balance of $225 for the year. Total Sales for the year were $1,000 and all sales were made on account (i.e., on credit). How much cash was collected from customers during the year? You may assume that there were no write-offs for uncollectible accounts.

a. $1,000 b. $225 c. $200 d. $975

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Answer #1
  • Correct Answer = Option ‘D’ $ 975

A

Beginning balance of Accounts receivables

$                      200

[given]

B

Sales on account

$                   1,000

[added because this increases account receivables balance]

C

Ending balance of Account receivables

$                      225

[deducted because it reduces account receivables balance]

D = A + B - C

Cash collected during the year.

$                      975

[Answer = Option 'D]

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