Crabtree Company's tabular analysis at the beginning of August included the following balances: How would Crabtree record the collection of the receivables in the tabular analysis?

Question

Crabtree Company's tabular analysis at the beginning of August included the following balances:  How would Crabtree record the collection of the receivables in the tabular analysis?

Quizplus · Accepted Answer

The collection of receivables results in an increase in cash and a decrease in accounts receivable. Therefore, the correct option is to increase cash by $2000 and decrease accounts receivable by $2000. Option A is incorrect because it implies that the revenues were not recorded previously, which is unlikely. Option B is incorrect because it implies a decrease in accounts payable, which is not related to the collection of receivables. Option D is incorrect because it only reflects a decrease in accounts receivable and does not account for the increase in cash.

Crabtree Company's Tabular Analysis at the Beginning of August Included