Micelle Inc. reported credit sales of $600,000, cash collections of $450,000 and bad debt expense of $15,000 for last year. Accounts receivable had a balance of $1,000,000 at the end of the year. Assuming there are no write-offs made during the year, what was the balance in the accounts receivable account at the beginning of the year?

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Quizplus · Accepted Answer

The beginning balance of accounts receivable can be calculated by adjusting the ending balance for the effects of the year's transactions. The ending balance of $1,000,000 is the result of the beginning balance plus credit sales ($600,000) minus cash collections ($450,000) minus bad debt expense ($15,000). Therefore, the beginning balance is $1,000,000 - $600,000 + $450,000 + $15,000 = $865,000.