The balance in Accounts Receivable at the beginning of the year was $500,000.The balance in Accounts Receivable at the end of the year was $700,000.Customer accounts of $400,000 were written off.The company collected $4,000,000 from credit customers and $1,000,000 from cash customers.What are credit sales for the year?

Question

Quizplus · Accepted Answer

To find the credit sales for the year, we need to use the following formula:

Credit Sales = Accounts Receivable at the beginning of the year + Credit Sales - Accounts Receivable at the end of the year

We know that the Accounts Receivable at the beginning of the year was $500,000 and the Accounts Receivable at the end of the year was $700,000. We also know that $400,000 of customer accounts were written off.

So, using the formula, we get:

Credit Sales = $500,000 + Credit Sales - $700,000 + $400,000
Credit Sales = $200,000 + Credit Sales

Now, we need to find the value of Credit Sales.

We know that the company collected $4,000,000 from credit customers and $1,000,000 from cash customers.

So, the total sales for the year would be:

Total Sales = Sales made on credit + Sales made for cash
Total Sales = Credit Sales + $1,000,000

We also know that Total Sales = $5,000,000 (credit sales and cash sales combined).

Therefore, we can set up the following equation:

$5,000,000 = Credit Sales + $1,000,000 
Credit Sales = $4,000,000

Hence, the credit sales for the year were $4,000,000, and the best choice is D.

The Balance in Accounts Receivable at the Beginning of the Year