Fernandez Company had an accounts receivable balance of $150,000 on December 31, Year 2 and $175,000 on December 31, Year 3. The company wrote off $40,000 of accounts receivable during Year 3. Sales for Year 3 totaled $600,000, and all sales were on account. The amount collected from customers on accounts receivable during Year 3 was:

The amount collected from customers on accounts receivable during year 3 is $535,000.

Explanation:

Cash received from accounts receivable = Opening balance of AR + Credit Sales - Bad debts written off - Closing balance of AR.

We can solve this question either by making a T account for accounts receivable or using the equation given above.

Cash = 150000 + 600000 - 40000 - 175000 = $535000

The amount collected from customers on accounts receivable during Year 3 was $535,000

Explanation:

Open a Total Trade Receivables Account and establish the cash collection amount from the Balancing figure as Follows:

Debits :

Opening Accounts Receivable Balance      $150,000

Sales for the Year (All on Account)              $600,000

Totals                                                              $750,000

Credits:

Closing  Accounts Receivable Balance       $175,000

Doubtful Debts Written Off                            $40,000

Cash (Balancing figure)                               $535,000

Totals                                                             $750,000

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