Question

During the first year of operation, 2018, McGinnis Appliance recognized $340,000 of service revenue on account. At the end of 2018, the accounts receivable balance was $66,836. Even though this is his first year in business, the owner believes he will collect all but about 5 percent of the ending balance. Required What amount of cash was collected by McGinnis during 2018

Answer 1

Answer:

$273,164

Explanation:

Data given in the question

Recognized amount of service revenue = $340,000

And, the account receivable balance is $66,836

So, by considering the above information, the amount of cash collected is

= Recognized amount of service revenue - the account receivable balance

= $340,000 - $66,836

= $273,164

By deducting the account receivable balance from the service revenue recognized amount we can get the cash collected amount