During 2016 Belfour Inc. had sales on account of $189000 cash sales of $78000 and collections on account of $162000. In addition they collected $1275 which had been written off as uncollectible in 2015. As a result of these transactions the change in the accounts receivable balance indicates a

Question

Quizplus · Accepted Answer

The formula to calculate the change in accounts receivable balance is: Beginning accounts receivable + Credit sales - Collections - Write-offs + Adjustments = Ending accounts receivable.

Using the given data:
Beginning accounts receivable = unknown
Credit sales = $189000
Collections = $162000 + $1275 = $163275
Write-offs = $0 (since $1275 was already collected)
Adjustments = $0 (no information provided)

We can rearrange the formula to solve for Beginning accounts receivable:

Beginning accounts receivable = Ending accounts receivable - Credit sales + Collections + Write-offs - Adjustments

Assuming the ending accounts receivable balance is the same as the beginning balance, we can simplify the formula to:

Change in accounts receivable = Collections - Credit sales + Write-offs
Change in accounts receivable = $163275 - $189000 + $1275
Change in accounts receivable = -$2450

Since the result is negative, it means that the accounts receivable balance has decreased, not increased. Therefore, the only possible answer is B, $27000 increase, which is incorrect. This means there may be an error or missing information in the problem.