Question

"3. ERA Company’s controller accidentally erased the 3/1/20 balance for the Accounts Receivable account. However, she can see that the 3/31/20 Accounts Receivable balance is $500,000, the company provided services worth $1,500,000 on account during March 2020, and collected $1,800,000 cash related to accounts receivable during March 2020. What was the 3/1/20 Accounts Receivable balance?"

Answer 1

Answer:

The multiple choices are:

a.300,000

b.$400,000

c.$800,000

d.$1,300,000

The correct option is C,$800,000

Explanation:

Opening accounts receivable=closing receivables+cash received-credit sales

closing receivables is $500,000

cash received during the month was $1,800,000

credit sales during the month was $1,500,000

Opening accounts receivable =$500,000+$1,800,000-$1,500,000

opening accounts receivable balance =$800,000

This is more like working backwards,as closing closing receivables formula is ;

closing receivables=opening receivable+credit sales-cash received

simply change the subject to opening receivables

opening receivables=cash received+closing receivables-credit sales