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From the following information calculate the cash received from customers.Accounts receivable opening balance                      $20,000Credit Sales                                                                  $840,000Accounts receivable closing balance                         $40,000

Question

From the following information calculate the cash received from customers.Accounts receivable opening balance                      20,000CreditSales                                                                20,000Credit Sales                                                                  840,000Accounts receivable closing balance                         $40,000

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Solution

To calculate the cash received from customers, you need to follow these steps:

  1. Start with the total credit sales for the period. In this case, it's $840,000.

  2. Subtract the closing balance of accounts receivable. This is the amount that customers owe at the end of the period, which has not yet been received. Here, it's $40,000.

  3. Add the opening balance of accounts receivable. This is the amount that customers owed at the beginning of the period. In this case, it's $20,000.

So, the calculation is:

840,000(CreditSales)840,000 (Credit Sales) - 40,000 (Accounts Receivable Closing Balance) + 20,000(AccountsReceivableOpeningBalance)=20,000 (Accounts Receivable Opening Balance) = 820,000

Therefore, the cash received from customers is $820,000.

This problem has been solved

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