Lenient Corp. reported cash sales of $1,145,000, credit sales of $1,880,000, cash returns of $50,000, bad debt write-offs of $300,000 and bad debt expense of $250,000 for last year. Accounts receivable had a balance of $3,400,000 at the beginning of the year and $2,350,000 at the end of the year. How much cash was collected from customers during the year?

Question

Quizplus · Accepted Answer

To calculate the cash collected from customers, start with the total sales (cash sales + credit sales) and adjust for any returns and collections on accounts receivable. The formula is: Cash Sales + (Beginning Accounts Receivable + Credit Sales - Ending Accounts Receivable - Bad Debt Write-off) - Cash Returns. Plugging in the numbers: $1,145,000 + ($3,400,000 + $1,880,000 - $2,350,000 - $300,000) - $50,000 = $3,725,000.