Question

Century Company's records were partially destroyed in a flood. The company does not know what sales have been for the year, but it does know all sales were on account. Also, the beginning accounts receivable balance was $37,000, and its accounts receivable balance at the time of the flood was $45,000. From the beginning of the year until the flood, cash collections from credit customers was $172,000. Given this information, what are Century Company's sales for the year until the flood?

Select one:
a. $180,000
b. $172,000
c. $209,000
d. $164,000

Answer 1

Century Company's sales for the year until the flood were calculated by adjusting the beginning and ending accounts receivable with the cash collections, resulting in a total sales figure of $164,000.

Step-by-step explanation:

To calculate Century Company's sales for the year until the flood using the given data, we need to follow the formula: Sales = Cash collections + Ending Accounts Receivable - Beginning Accounts Receivable. Starting with the beginning accounts receivable of $37,000, adding the cash collections from customers of $172,000, and subtracting the ending accounts receivable balance of $45,000, we find the company's sales.

Sales = $37,000 + $172,000 - $45,000 = $164,000.

Therefore, the company's sales for the year up to the point of the flood were $164,000. To calculate the sales for the year until the flood , we need to find the increase in accounts receivable . The difference in the accounts receivable balance between the beginning and the time of the flood gives us the increase in accounts receivable ,which is $8000. this increase in accounts receivable represents the amount of sales made on account