Question

The balance in Accounts Receivable was $650,000 at the beginning of the year and $770,000 at the end of the year. Credit sales for the year totaled $4,120,000. During the year, $450,000 in customer accounts were collected. Calculate the cash collected from customers during the year and the amount of credit sales that remain uncollected.

Answer 1

To calculate the cash collected and the amount of credit sales uncollected, subtract the decrease in Accounts Receivable from the total credit sales and subtract the cash collected from the total credit sales, respectively.

Step-by-step explanation:

To calculate the cash collected from customers during the year, we need to subtract the decrease in Accounts Receivable from the total credit sales. The decrease in Accounts Receivable is calculated as the beginning balance plus the credit sales minus the ending balance. In this case, the decrease in Accounts Receivable is $650,000 + $4,120,000 - $770,000 = $4,000,000.

To calculate the amount of credit sales that remain uncollected, we subtract the cash collected from the total credit sales. In this case, it would be $4,120,000 - $450,000 = $3,670,000.