Question

During Year 1, Ramona Department Store had total sales of $3,000,000, of which 80% were on credit. The beginning balance in Accounts Receivable (on January 1 of Year 1) was $165,000. The beginning balance in the Allowance for Bad Debts (on January 1 of Year 1) was $20,000. The amount of accounts written off as
uncollectible during the year was $27,000.
The following aging of Accounts Receivable is for Ramona Company at the end of Year.
Aging of Accounts Receivable December 31 of Year 1
Less than 31 days to 61 days to Over
Overall 30 days 60 days 90 days 90 days
Total $492,000 $366,000 $72,000 $24,000 $30,000
Ramona Company has developed the following bad debt information from its own past experience. Percent Ultimately
Age of Account Uncollectible
Less than 30 days 2
31 to 60 days 12
61 to 90 days 35
Over 90 days 90
How much CASH was collected from CREDIT CUSTOMERS during the year?
a. $2,073,000
b. $2,721,000
c. $2,400,000
d. $2,370,000
e. $2,424,000
f. $2,046,000

Answer 1

Answer:

the answer is 2.046.000

Explanation:

Basically you have to do all the journal entries that hit the AR account and then sum up the movements

Firstly Sales

Sales                                               3.000.000

AR              3.000.000

Cash sales ( 20% that were sold in cash)

AR                                                   600.000

Cash                     600.000

Write off                   27.000

Ar                                                        27.000

Once you have that sum all the movements for AR

Beginning balance                   165.000

Sales                                       3.000.000

cash sales                                 -600.000

Write off                                      -27.000

Total                                        2.538.000

then minus ending balance that was given of 492.000

2.538.000-492.000= 2.046.000