Question

At December 1, 2014, Orear Company's Accounts Receivable balance was $5,600. During December, Orear had credit sales of $15,000 and collected accounts receivable of $12,000. At December 31, 2014, the Accounts Receivable balance is:

a. $5,600 debit
b. $8,600 debit
c. $20,600 debit
d. $8,600 credit

Answer 1

The Accounts Receivable balance for Orear Company at December 31, 2014, is $8,600 debit, calculated by adding the credit sales to the initial receivables balance and subtracting the collections.

Step-by-step explanation:

At December 1, 2014, Orear Company had an Accounts Receivable balance of $5,600. In December, Orear Company made credit sales totalling $15,000 and collected accounts receivable of $12,000. To calculate the Accounts Receivable balance at December 31, 2014, we need to add the credit sales to the initial balance and then subtract the collections:

Beginning Accounts Receivable + Credit Sales - Collections = Ending Accounts Receivable

$5,600 + $15,000 - $12,000 = $8,600

Therefore, the Accounts Receivable balance on December 31, 2014, would be $8,600 debit.