DryGrass Ltd provides the following information that relates to the period ended 30 June 2015:
$$\begin{array} { | l | r | }
\hline & \$ 0 \
\hline \text { Sales for the year } & 780 \
\hline \text { Discounts provided to customers for early payment } & 65 \
\hline \text { Bad debts expense } & 20 \
\hline \text { Opening balance of accounts receivable } & 330 \
\hline \text { Closing balance of accounts receivable } & 250 \
\hline \text { Sales returns } & 35 \
\hline
\end{array}$$
What amount of cash was received from customers during the year?
A) $775 000
B) $580 000
C) $740 000
D) $615 000

Question

DryGrass Ltd provides the following information that relates to the period ended 30 June 2015:
$$\begin{array} { | l | r | } 
\hline & \$ 0 \
\hline \text { Sales for the year } & 780 \
\hline \text { Discounts provided to customers for early payment } & 65 \
\hline \text { Bad debts expense } & 20 \
\hline \text { Opening balance of accounts receivable } & 330 \
\hline \text { Closing balance of accounts receivable } & 250 \
\hline \text { Sales returns } & 35 \
\hline
\end{array}$$
What amount of cash was received from customers during the year?
A) $775 000
B) $580 000
C) $740 000
D) $615 000

Quizplus · Accepted Answer

To calculate the cash received from customers, start with the sales for the year, subtract discounts and sales returns, and adjust for the change in accounts receivable. Sales for the year are $780,000, discounts provided are $65,000, and sales returns are $35,000. The opening balance of accounts receivable is $330,000 and the closing balance is $250,000, indicating a decrease in accounts receivable of $80,000. The calculation is as follows: $780,000 - $65,000 - $35,000 + $80,000 = $760,000. However, the correct calculation should include the bad debts expense as it does not affect the cash received, leading to: $780,000 - $65,000 - $35,000 + $80,000 = $760,000. The mistake in the calculation was acknowledged, and the correct answer should be based on the given options and the correct approach to the calculation.

DryGrass Ltd Provides the Following Information That Relates to the Period