The Accounts Receivable account for Johnny's Mechanic Shop had a beginning balance of $32,000.During the month,Johnny made sales on account of $42,000.The ending balance in the Accounts Receivable account is $30,000.What are cash collections for the month?
A)$32,000
B)$42,000
C)$44,000
D)$74,000

Question

Quizplus · Accepted Answer

To find cash collections for the month, we need to subtract the decrease in Accounts Receivable from credit sales made during the month.
Credit sales = $42,000
Decrease in Accounts Receivable = Beginning balance - Ending balance = $32,000 - $30,000 = $2,000
Cash collections = Credit sales - Decrease in Accounts Receivable = $42,000 - $2,000 = $44,000. 
Therefore, the best choice is C.

The Accounts Receivable Account for Johnny's Mechanic Shop Had a Beginning