Question

On January​ 1, 2017, the Accounts Receivable of Martha Company had a debit balance of $ 200 comma 000. During​ January, the company provided services for $ 700 comma 000 on account. The company collected $ 240 comma 000 from its customers on account in January. What was the ending balance in the Accounts Receivable account at the end of​ January?

Answer 1

$660,000

Step-by-step explanation:

Accounts receivables are assets and accordingly, they have debit balance.

The opening balance of accounts receivables = $200,000

Add: Services provided on account = $700,000

Services provided on account is the revenue generated and the payment will be received in future, and thus, will create accounts receivables.

The company collected $240,000 from the accounts receivables, this means with this amount the balance of amount to be received from customers will be decreased.

Accordingly $240,000 amount of accounts receivables will be credited against cash account.

Ending balance of accounts receivables in January = Opening + Addition - Payment received

= $200,000 + $700,000 - $240,000 = $660,000