Question

Tanner Service Company reported an annual sales revenue of $560,000 in 2019. During the year, accounts receivable decreased from a $22,500 beginning balance to an $18,800 ending balance. Accounts payable decreased from a $15,200 beginning balance to a $13,600 ending balance. Assume that all sales were made on account. How much is cash received from customers for the year

Answer 1

The cash received from customers for the year is calculated as the annual sales revenue plus beginning accounts receivable minus ending accounts receivable, amounting to $563,700 for Tanner Service Company.

Step-by-step explanation:

To calculate the cash received from customers for the year, we need to adjust the sales revenue by the change in accounts receivable. Since sales were all on account, the following formula is used:

Cash Received = Sales Revenue + Beginning Accounts Receivable - Ending Accounts Receivable

For Tanner Service Company, the cash received calculation would be:

Cash Received = $560,000 + $22,500 (Beginning Accounts Receivable) - $18,800 (Ending Accounts Receivable)

This gives us:

Cash Received = $560,000 + $22,500 - $18,800 = $563,700

The accounts payable decrease does not affect the cash received from customers directly, hence it's not included in the calculation.

Answer 2

$563,700

Step-by-step explanation:

Calculation of cash is as seen below.

Sales revenue. $560,000

Add: Decrease in accounts receivable ($22,500 - $18,800) $3,700

Cash received from customers. $563,700.

Note: other information given in the question are not relevant for the computation of cash received from customers for the year.

Therefore, cash received from customers for the year is $563,700