Question

Question The following selected account balances were taken from ABC Company's general ledgers for 2019: January 1, 2019 Inventory 74,000 Accounts payable 50,000 Salaries payable 9,000 Investments 68,000 Accounts receivable 69,000 Land 58,000 Notes payable 195,000 Unearned revenue 17,000 Common stock 100,000 Retained earnings 23,000 December 31, 2019 56,000 28,000 4,000 75,000 35,000 88,000 120,000 25,000 190,000 63,000 The following information was taken from ABC Company's 2019 income statement: Sales revenue Cost of goods sold Salaries expense Net income $420,000 300,000 68,000 $ 52,000 Calculate the amount of cash collected from customers during 2019.

Answer 1

Cash collected from customers= Sales add Decrease in accounts receivable/ minus Increase in receivables

or

Opening accounts receivable+Sales-Closing Accounts receivable

Here Opening accounts receivable= 69,000

Sales=420,000

Closing accounts receivable=35,000

Hence Cash collected=69000+420000-35000

=454000   

Furthermore there is increase in unearned revenue balance during the year which means that cash was collected from the customer for which work has not yet been performed.

Increase in balance=25000-17000

=8000

Hence total cash collected=8000+454000

=462000