In 2017 Phosphate Aurora Inc.reported an increase in Accounts Receivable of $7,500 and cash collections on account of $430,000.Sales on account for the period were:

Question

Quizplus · Accepted Answer

The increase in accounts receivable of $7,500 is not the same as sales on account for the period. The cash collections on account of $430,000 are not the same as sales on account for the period either. However, we can use the formula:
Sales on account = Beginning accounts receivable + Credit sales - Ending accounts receivable
Since we do not have information on beginning and ending accounts receivable, we cannot use this formula directly. However, we know that the cash collections on account were $430,000, which means that whatever sales were made on account, $430,000 was collected. Therefore, we can say that:
Cash collections on account = Sales on account - Decrease in accounts receivable
Solving for sales on account, we get:
Sales on account = Cash collections on account + Decrease in accounts receivable
Sales on account = $430,000 + $7,500
Sales on account = $437,500
Therefore, the best choice is B.