Question

the accounts receivable account for johnnys mechanic shop had a beginning balance of $32,000. during the month, johnny made sales on account of $47,000. the ending balance in the accounts receivable account is $35,000. what are cash collections on credit sales for the month?

a. $32,000
b. $79,000
c. $47,000
d. $44,000

Explanation:

Step1: Recall the accounts - receivable formula

The formula for ending accounts - receivable is $Ending\ Accounts\ Receivable=Beginning\ Accounts\ Receivable + Credit\ Sales - Cash\ Collections$.
We need to solve for Cash Collections. Rearranging the formula gives $Cash\ Collections=Beginning\ Accounts\ Receivable + Credit\ Sales - Ending\ Accounts\ Receivable$.

Step2: Substitute the given values

Beginning Accounts Receivable = $32000$, Credit Sales = $47000$, and Ending Accounts Receivable = $35000$.
$Cash\ Collections=32000 + 47000-35000$.

Step3: Perform the calculation

$32000 + 47000=79000$, and $79000 - 35000 = 44000$.

Answer:

D. $44,000$