Question

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:

Answer 1

Answer:

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

Answer 2

Answer:

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