Statements of financial position on December 31, Year 1, and December 31, Year 2, are presented below. Dec 31, Dec. 31,
Year 1 Year 2
Assets
Cash 50,000 $ 60,000
Accounts receivable 95,000 89,000
Allowance for uncollectible accounts (4.000) (3.000)
Inventory 120,000 140,000
Property, plant, and equipment 295,000 340,000
Accumulated depreciation (102,000) (119.000)
Total Assets $ 454.000 $507.000
Liabilities and equity:
Trade accounts payable $ 62,000 $ 49,000
Interest payable 8,000 11.000
Bonds payable 200,000 200,000
Unamortized bond discount (15,000) (10,000)
Equity 199,000 257,000
Total liabilities and equity $454,000 $507,000
Additional information for Year 2:
1. Sales revenue was $338,000
2. $3.000 of accounts receivable was written off
Cash collections from customers in Year 2 were 200.00 332
A. $344,000
B. $341,000
C. $335.000
D. $338,000

Cash collections from customers in Year 2 were:

B. $341,000

Explanation:

a) Data and Calculations:

Statements of Financial Position on December 31, Year 1 and Year 2:

                                                              Year 1     Year 2

Assets

Cash                                                     50,000   $ 60,000

Accounts receivable                            95,000      89,000

Allowance for uncollectible accounts (4.000)       (3.000)

Inventory                                            120,000      140,000

Property, plant, and equipment       295,000    340,000

Accumulated depreciation               (102,000)   (119.000)

Total Assets                                   $ 454.000  $507.000

Liabilities and equity:

Trade accounts payable                $ 62,000    $ 49,000

Interest payable                                   8,000         11.000

Bonds payable                                200,000     200,000

Unamortized bond discount            (15,000)      (10,000)

Equity                                               199,000     257,000

Total liabilities and equity            $454,000  $507,000

Calculation of cash collected from customers in Year 2:

                                                              Year 1     Year 2

Accounts receivable                           95,000    89,000

Sales revenue                                   338,000

Uncollectible written off                      (3,000)

Balance at the end of year 2            (89,000)

Cash collections =                          $341,000

b) The cash collected from customers is the difference between Beginning accounts receivable, credit sales (sales revenue), written off uncollectible, and the balance at the end of year 2.