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The comparative balance sheets of Sloan Company reveal that accounts receivable (before deducting allowances) increased by $15,000 in 2016. During the same time period, the allowance for uncollectible accounts increased by $2,100. If sales revenue was $120,000 in 2016 and bad debts expense was 3% of sales, how much cash was collected from customers during the year

Respuesta :

Answer:

$103,500

Explanation:

The computation of the cash collected from customers is shown below:

= Sales revenue - Increase in accounts receivable - written off  amount

where,

Increase in account receivable = $15,000

Sales revenue = $120,000

Since

Bad debt expense = 3% of sales

So, Bad debt expense

= $120,000 × 3%

= $3,600

Now the written off amount is

= $3,600 - $2,100

= $1,500

So, the cash collection from customers is

= $120,000 - $15,000 - $1,500

= $103,500