Question

The financial statements of the Blossom Company reported net sales of $888,000 and accounts receivable of $69,600 and $36,000 at the beginning of the year and end of the year, respectively. Calculate the cash collected from customers during the year.

Answer 1

To find the cash collected from customers for the Blossom Company, calculate the change in accounts receivable and adjust the net sales figure. The cash collected from customers equals the net sales of $888,000 plus the increase in accounts receivable of $33,600, totaling $921,600.

Step-by-step explanation:

To calculate the cash collected from customers during the year for Blossom Company, we need to adjust the net sales figure by the change in accounts receivable.

Here's how you can calculate it:

1. Start with the reported net sales: $888,000.
2. Calculate the change in accounts receivable by subtracting the ending accounts receivable ($36,000) from the beginning accounts receivable ($69,600).
3. Add this change in accounts receivable to the net sales to find the cash collected from customers.

Change in accounts receivable = Beginning Accounts Receivable - Ending Accounts Receivable
Change in accounts receivable = $69,600 - $36,000 = $33,600

Therefore, the cash collected from customers = Net Sales + Increase in Accounts Receivable
Cash Collected from Customers = $888,000 + $33,600 = $921,600