Question

The balance sheet reported a beginning balance of shs. 20,000 in Accounts Receivable and an ending balance of shs. 15,000. Credit Sales of shs. 200,000 were made during the year. Using this information, compute cash collected from customers.
Question 13Select one:

1.
shs. 205,000

2.
shs. 195,000

3.
shs. 200,000

4.
shs. 215,000

Answer 1

To calculate cash collected from customers, we need to find the total amount of credit sales made during the year and then subtract the decrease in accounts receivable.

Total credit sales: shs. 200,000
Decrease in accounts receivable: shs. 20,000 - shs. 15,000 = shs. 5,000

Cash collected from customers = Total credit sales - Decrease in accounts receivable
Cash collected from customers = shs. 200,000 - shs. 5,000
Cash collected from customers = shs. 195,000

Therefore, the correct answer is:
2. shs. 195,000