Question

On its recent financial statements, Hassell Fine Foods reported the following information about net sales revenue and accounts receivable (amounts in thousands):

Current Year Prior Year
Accounts receivable, net of allowances of $213 and $177 $14,189 $11,938
Net sales revenue 61,920 52,622

Requied:
a. What amount of bad debts was written off during the current year?
b. Based on your answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Hassell's sales during the period were on open account.

Answer 1

The amount of bad debts written off during the current year is $2,251 thousand. The cash collected from customers for the current year is $59,669 thousand.

Step-by-step explanation:

To calculate the amount of bad debts written off during the current year, we need to find the change in accounts receivable balance. We subtract the prior year's accounts receivable balance from the current year's accounts receivable balance. So, the bad debts written off during the current year would be $14,189 - $11,938 = $2,251 thousand.

To solve for cash collected from customers for the current year, we need to find the change in accounts receivable balance. We subtract the change in accounts receivable from net sales revenue. So, the cash collected from customers for the current year would be $61,920 - $2,251 = $59,669 thousand.