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    Determine the cash collected from customers

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    The following information was taken from the 2005 financial statement of the AB Corporation:

    Accounts receivable, Jan 1, 2005 $30,000
    Accounts receivable, Dec 31, 2005 $40,000
    Sales ( all credit sales) $480,000

    Note: No accounts receivable were written off or recovered during the year.

    a) Determine the cash collected from customers by the AB Corporation in 2005
    b) Comment on why cash collected from customers differed from sales.

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    Solution Preview

    Opening accounts receivable = 30,000
    Closing accounts receivable = 40,000
    Sales = 480,000

    They collected $470,000 from customers throughout the year. This number ...

    Solution Summary

    This problem reveals how to determine what cash has been collected from customers.