Question

grande company had credit sales of $60,000 in the current period. accounts receivable had a beginning balance of $14,000 and an ending balance of $17,000. compute its cash collections from its credit sales for the current period.

Answer 1

The cash collections from Grande Company's credit sales for the current period are determined by subtracting the increase in accounts receivable ($3,000) from the total credit sales ($60,000), which results in cash collections of $57,000.

Step-by-step explanation:

To compute the cash collections from Granda Company's credit sales, we need to understand the relationship between credit sales, accounts receivable, and cash collections. The beginning and ending balances of accounts receivable are also critical. The formula to calculate cash collections is as follows:

Cash Collections = Credit Sales - Increase in Accounts Receivable

Given that Grande Company had credit sales of $60,000, a beginning accounts receivable balance of $14,000, and an ending balance of $17,000, the increase in accounts receivable during the period is $17,000 - $14,000 = $3,000. We now subtract this increase from the credit sales to determine the cash collections:

Cash Collections = $60,000 - $3,000 = $57,000

Therefore, the cash collections from credit sales for the current period are $57,000.