Al-bracken Co. began the year with an accounts receivable balance of $78,000, an

Question

Al-bracken Co. began the year with an accounts receivable balance of $78,000, and ended the year with an accounts receivable balance of $54,000. During the year, Al-bracken Co. recorded $445,400 of sales on account. How much cash did Al-bracken Co. collect from its customers during the year?

Elle’s Soap Co. began the year with an accounts payable balance related to inventory purchases of $15,000. The balance in the account at the end of the year was $26,800. During the year, Elle’s Soap Co. purchased $118,000 of inventory on account. How much cash did Elle’s Soap Co. pay for inventory purchases during the year?

Explanation / Answer

1). Calculations of Collectioin form customers:
Sales on account during the year :                       $445,400
Add: Opening Account receivables                       $78,000
Less: Closing Account Receivables                      $54,000
Collections from Customers                                $469,400

2). Purchases during the year                             $118,000
     Add: Opening Account Payables                    $15,000
    Less: Closing Account Payables                     $26,800
Payment made                                               $106,200

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