If sales are 680000 and the beginning and ending balances of

If sales are $680,000 and the beginning and ending balances of Accounts Receivable are $34,400 and $38,400, respectively, the cash collected from customers is:

Multiple Choice

$680,000.

$641,600.

$676,000.

$684,000.

Solution

Solution: Answer is 3rd option: $676,000 Working Notes: Cash collected from customers = Sales + Beginning Accounts receivable balance - Ending Accounts receivable balance Cash collected from customers =$680,000 + $34,400 - $38,400 =$676,000 Notes: Cash collection from accounts receivable are cash received from sales & Cash received from accounts receivable In our case cash is received from sales But account receivable increase from $34,400 to $38,400 , means net increase in accounts receivable. Please feel free to ask if anything about above solution in comment section of the question.