Question

Crane Shop had a balance in the accounts receivable account of $800,000 at the beginning of the year and a balance of $880,000 at the end of the year net credits. What was the total net credits during the year?

A) $80,000
B) $680,000
C) $1,680,000
D) $880,000

Answer 1

The total net credits for Crane Shop during the year are calculated by subtracting the starting accounts receivable balance from the ending balance, which results in $80,000. Therefore, the answer is A) $80,000.

Step-by-step explanation:

The question asks about calculating the total net credits for Crane Shop, given their accounts receivable balance at the beginning and end of the year. To determine this, you'd look at the change in the accounts receivable balance, as this reflects the net credits (sales on credit minus collections) over the period.

At the start of the year, the accounts receivable balance is $800,000, and at the end of the year, it is $880,000. The increase in the accounts receivable balance is $880,000 - $800,000, which equals $80,000. This increase represents the net credits for the year, so the correct answer to the student's question is A) $80,000.