Question

Cavco company recorded sales of $1,500,000 in 2020, in addition the company’s accounts receivable balance grew from $135,000 at the beginning of 2020 to $175,000 at the end of 2020. How much cash did Cavco collect from customers in 2020?

a) $1,250,000
b) $1,460,000
c) $1,635,000
d) $1,675,000

Answer 1

Cavco company collected $1,460,000 in cash from customers in 2020. This is calculated by subtracting the increase in accounts receivable ($40,000) from the total sales ($1,500,000) Option b).

Step-by-step explanation:

The question deals with the calculation of cash collected from customers by Cavco company in the year 2020. Given that the sales were $1,500,000 and accounts receivable increased from $135,000 to $175,000, the increase in accounts receivable implies that not all sales were collected in cash. To find the cash collected, we need to subtract the increase in accounts receivable from the sales.

Here's the calculation:

• Sales: $1,500,000
• Accounts Receivable at the beginning of 2020: $135,000
• Accounts Receivable at the end of 2020: $175,000
• Increase in Accounts Receivable: $175,000 - $135,000 = $40,000
• Cash Collected: $1,500,000 - $40,000 = $1,460,000

Therefore, the correct answer is $1,460,000, representing the cash collected from customers by Cavco company in 2020.