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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
Publisher: Cengage Learning,
ISBN: 9781337794756
Chapter 23A, Problem 1SEA
Textbook Problem
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CASH RECEIVED FROM CUSTOMERS Potts Company’s sales for 20-2 were $800,000. The Accounts Receivable balance as of December 31, 20-1, was $90,000. This same account had a balance of $75,000 as of December 31, 20-2. Compute the amount of cash received from customers in 20-2.

To determine

Compute the amount of cash received from customers in 20-2.

Explanation of Solution

Cash receipts from customers: It represents the total amount of cash received from the sales as well as from the accounts receivables.

Compute the amount of cash received from customers in 20-2.

Step 1: Calculate the change in accounts receivable.

Change in accounts receivable=(Ending balanceBeginning balance)=$75,000$90,000=$15,000(Decrease)

Step 2: The Calculate the amount of cash received from customers in 20-2.

CashreceiptsfromCustomers]=Net sales (+

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