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The beginning balance in Accounts Receivable on Company A’s Year 2 Balance Sheet is $40,000. Sales on account during Year 2 are $400,000, cash collections from customers are $210,000, and an account for a customer owing $10,000 was written off because the company didn’t think the customer would pay. What is the ending balance in AR on the Year 2 Balance Sheet? Assuming no other transactions affected the account during the year.


Correct answer. The Ending Balance in AR (?) = the Beginning Balance in AR 40,000 + Sales on account 400,000 – Cash collections 210,000 – Write-off of AR 10,000 = 220,000

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