Question

During 2017, Kew Company, a service organization, had $200,000 in cash sales and $3,000,000 in credit sales. The accounts receivable balances were $400,000 and $485,000 at December 31, 2016 and 2017, respectively.
Required:
What was Kew Company’s cash receipts from sales in 2017?

Answer 1

Answer:

$ 3,115,000

Explanation:

Calculation for Kew Company’s cash receipts from sales in 2017

Beginning accounts receivable balance $ 400,000

Add Total credit sales $ 3,000,000

Total accounts receivable $ 3,400,000

Less: Ending accounts receivable balance $ 485,000

Cash received from receivables $ 2,915,000

Add Cash sales 200,000

Cash receipts from sales $ 3,115,000

Therefore Kew Company’s cash receipts from sales in 2017 will be $ 3,115,000