Certain information relative to the 2014 operations of Ball Co. follows: $\begin{array}{lr}
\text { Accounts receivable, January } 1,2014 & \$ 96,000 \
\text { Accounts receivable collected during } 2014 & 184,000 \
\text { Cash sales during } 2014 & 48,000 \
\text { Inventory, January } 1,2014 & 72,000\\text { Inventory, December } 31,2014 & 66,000 \
\text { Purchases of inventory during } 2014 & 160,000 \
\text { Gross profit on sales } & 54,000
\end{array}$ What is Ball's accounts receivable balance at December 31, 2014?
A) $72,000.
B) $84,000.
C) $96,000.
D) $132,000.

Question

Quizplus · Accepted Answer

To find the accounts receivable balance at December 31, 2014, we need to calculate the total sales and then subtract the amount collected. Total sales include both cash sales and credit sales. Credit sales can be found by adding the gross profit to the cost of goods sold (COGS) and then subtracting cash sales. COGS is calculated as the beginning inventory plus purchases minus the ending inventory. COGS = Beginning Inventory + Purchases - Ending Inventory = $72,000 + $160,000 - $66,000 = $166,000.Total Sales = Gross Profit + COGS = $54,000 + $166,000 = $220,000.Credit Sales = Total Sales - Cash Sales = $220,000 - $48,000 = $172,000.The beginning accounts receivable was $96,000, and $184,000 was collected. To find the ending accounts receivable, we add the credit sales to the beginning accounts receivable and then subtract the collections.Ending Accounts Receivable = Beginning Accounts Receivable + Credit Sales - Collections = $96,000 + $172,000 - $184,000 = $84,000.

Certain Information Relative to the 2014 Operations of Ball Co