Question

Pierce Corporation reported a $3,600 balance in accounts receivable on January 1, 2014. During the year, $24,800 of sales on account were made. During the year, Price wrote off accounts receivable of $1,700 as uncollectible. If the ending balance of accounts receivable is $2,000, what is the amount of cash received from customers?

Answer 1

Calculation of cash received from the customer

Particulars	amount ($)
Opening balance of accounts receivable on January 1, 2014	3600
Add :- sales on account were made during year	24800
Less :- wrote off account receivable as uncollectible	(1700)
Less :- cash collected from the accounts receivable during the year (balancing figure)	(24700)
Balance of accounts receivable at the end of the year	2000

Cash collected from the accounts receivable during the year is $24700

Alternative solution :-

Cash collected from the accounts receivable during the year = (opening balance of accounts receivable + sales made on account during the year - write off of accounts receivable as uncollectible - closing balance of accounts receivable)

= [($3600 + $24800) - (1700 + 2000)]

= $24700

Cash collected from account receivables during the year = $24700.

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