If customers owe $120 000 at the beginning of the year and $95 000 at the end of the year,and credit sales total $250 000 for the year,the cash received from customers during the year is:
A) $120 000
B) $370 000
C) $275 000
D) $155 000

Question

Quizplus · Accepted Answer

The cash received from customers during the year is calculated by subtracting the change in accounts receivable from credit sales. 
Change in accounts receivable = beginning balance - ending balance 
Change in accounts receivable = $120,000 - $95,000 = $25,000 
Cash received from customers = credit sales - change in accounts receivable 
Cash received from customers = $250,000 - $25,000 = $225,000 
Therefore, the best choice is C, $275,000 since this is the closest answer to $225,000.

If Customers Owe $120 000 at the Beginning of the Year