Question

Accounts receivable written-off as uncollectible during the year amounted to $11,500. The accounts receivable balance at the beginning of the year was $150,000. The accounts receivable balance at the end of the year was $210,000. The allowance for doubtful accounts balance at the beginning of the year was $14,000. The allowance for doubtful accounts balance at the end of the year after the recording of bad debt expense was $12,900. Credit sales during the year totaled $900,000. How much cash did XT receive from collections of accounts receivable

Answer 1

TX received cash of $828,500 from collections of accounts receivable.

Step-by-step explanation:

To arrive at the cash collections on accounts receivable, we need to do a movement of accounts receivable as follows:

Opening balance $150,000

Write-off during the year ($11,500)

Credit sales $900,000

Collections X

Closing balance $210,000

$1,038,500 - X = $210,000

X = $828,500; therefore, the collections is $828,500.

The allowance for doubtful accounts of $12,900 is only necessary to arrive at the net cash realizable of the accounts receivable as $828,500 - $12,900 = $815,600