Question

Warren Company began the accounting period with a $38,000 debit balance in its accounts receivable account. During the accounting period, the company recorded revenue on account amounting to $88,000. The accounts receivable account at the end of the accounting period contained a $19,000 debit balance. Based on this information, what is the amount of cash collected from customers during the period?

a. $75,000
b. $95,000
c. $107,000
d. $31,000

Answer 1

Answer:

c. $107,000

Explanation:

We can calculate cash collected from the customers by following calculations

Accounts receivable op balance                   $38,000

Add : Sales on account during year               $88,000

Less Closing Balance on Receivables          - $19,000

Cash Collected from Customers                    $107,000

This is the net amount collected on behalf of customers while $19,000 is still recoverable in consequent accounting cycle.

Hope that helps.