Question

At January 1, 2020, Eikenberry Inc. had accounts receivable of $72,000. At December 31, 2020, accounts receivable is $54,000. Sales revenue for 2020 total $420,000.

Compute Eikenberry's 2020 cash receipts from customers.
cash receipts from customers. $_____

Answer 1

To calculate Eikenberry Inc.'s cash receipts from customers for the year 2020, we subtract the net change in accounts receivable from the total sales revenue. The answer is cash receipts of $402,000 for the year.

Step-by-step explanation:

To compute Eikenberry Inc.'s 2020 cash receipts from customers, we need to analyze the change in accounts receivable and the total sales revenue for the year. We'll start with the sales revenue and then adjust for the accounts receivable.

We know:

• Beginning Accounts Receivable = $72,000
• Ending Accounts Receivable = $54,000
• Total Sales Revenue = $420,000

To find the cash receipts, use the formula:

Cash Receipts = Sales Revenue - (Beginning Accounts Receivable - Ending Accounts Receivable)

So,

Cash Receipts = $420,000 - ($72,000 - $54,000)

Cash Receipts = $420,000 - $18,000

Cash Receipts = $402,000

Therefore, Eikenberry Inc.'s cash receipts from customers in 2020 totaled $402,000.