Question

Maxwell Furniture Center had accounts receivable of $ 20, 000 at the beginning of the year and $ 54, 000 at year-end. Revenue for the year totaled $ 116, 000. How much cash did the business collect from customers?

A. $ 150, 000
B. $ 62, 000
C. $ 116, 000
D. $ 82, 000

Answer 1

To determine the cash collected, the Revenue of $116,000 is reduced by the increase in accounts receivable of $34,000, resulting in a total cash collection of $82,000 by Maxwell Furniture Center for the year. Option D

Step-by-step explanation:

To calculate the amount of cash collected from customers by Maxwell Furniture Center during the year, we need to start with the Revenue generated from sales and adjust it for the change in accounts receivable. Here is how it is done:

Beginning Accounts Receivable: $20,000

Ending Accounts Receivable: $54,000

Revenue (Sales): $116,000

The change in Accounts Receivable is calculated as follows:

Change in Accounts Receivable = Ending Accounts Receivable - Beginning Accounts Receivable

Change in Accounts Receivable = $54,000 - $20,000 = $34,000

Since the Accounts Receivable increased over the year, this means that not all sales revenue was collected in cash. To find out the cash received, we subtract the increase in Accounts Receivable from the Revenue:

Cash Received = Revenue - Increase in Accounts Receivable

Cash Received = $116,000 - $34,000 = $82,000

Therefore, the correct answer is D. $82,000.