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21 November, 15:34

The balance in the Accounts Receivable account decreased from $18,000 at the beginning of the month to $15,000 at the end of the month. Sales on account during the month totaled $130,000. No accounts receivable were written off as uncollectible during the month. Cash collections of accounts receivable during the month totaled:

a. 127,000

b. 130,000

c. 133,000

d. 145,000

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  1. 21 November, 16:28
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    Answer: The answer is c. 133,000.

    Explanation: Accounts receivable is a current asset in the balance sheet (statement of financial position). Meaning, it easily can be converted to cash. The amount schedule of account receivable usually looks like this:

    Opening balance $18,000

    +Addition 130,000

    -Receipt (cash) X

    =Closing balance $15,000

    To find X, simply change the subject of the formula as:

    $18,000 + $130,000 - X = $15,000

    $148,000 - X = $15,000

    X = $148,000 - $15,000

    X = $133,000 Receipt (cash)
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