During 20B,its second year in operation,Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000.Assume all sales were on account and the amount of cash collected from customers was $5,960,000.The amount of trade receivables at the beginning of 20B was $1,200,000.Based on this information,what is the amount of trade receivables that Banner would report at the end of 20B?

Question

Quizplus · Accepted Answer

To find out the amount of trade receivables at the end of 20B, we need to subtract the cash collected from customers ($5,960,000) from the total sales made during 20B ($5,850,000).

Total sales made during 20B = $5,850,000 
Cash collected from customers during 20B = $5,960,000

Therefore, the remaining amount that is yet to be collected from customers (which is the amount of trade receivables at the end of 20B) can be calculated as follows:

Trade receivables at the beginning of 20B = $1,200,000

Total credit sales during 20B = $5,850,000 
Cash collected from customers during 20B = $5,960,000

Amount of trade receivables at the end of 20B = Trade receivables at the beginning of 20B + Total credit sales during 20B - Cash collected from customers during 20B 
= $1,200,000 + $5,850,000 - $5,960,000 
= $1,090,000

Therefore, the amount of trade receivables that Banner would report at the end of 20B is $1,090,000, which is option B.

During 20B,its Second Year in Operation,Banner Company Delivered Goods to Customers