Jerome Smith,Inc.began the year with $279,000 in Accounts Receivable and ended the year with $232,700 in Accounts Receivable.Sales for the year were $3,870,000.The cash collected from customers during the year amounted to:
A)$3,823,700.
B)$3,916,300.
C)$4,102,700.
D)$4,149,000.

Question

Quizplus · Accepted Answer

To find the cash collected from customers during the year, we need to determine the change in Accounts Receivable first.

Change in Accounts Receivable = Ending Accounts Receivable - Beginning Accounts Receivable 
Change in Accounts Receivable = $232,700 - $279,000 
Change in Accounts Receivable = -$46,300 (negative indicates a decrease)

This means that the Accounts Receivable decreased by $46,300 during the year.

We can use the following formula to calculate cash collected from customers:

Cash collected from customers = Sales + Beginning Accounts Receivable - Ending Accounts Receivable

Cash collected from customers = $3,870,000 + $279,000 - $232,700 
Cash collected from customers = $3,916,300

Therefore, the best choice is B, which states that the cash collected from customers during the year amounted to $3,916,300.