Oral Corporation's beginning accounts receivable were $200,000 and ending accounts receivable were $270,000. During the period $500,000 cash was collected from customer credit sales. Calculate the amount of Oral Corporation sales on account during the period.
a. 470,000
b. $680,000
c. $570,000
d. $770,000
To calculate the amount of Oral Corporation sales on account during the period, we need to find the change in accounts receivable first.
The change in accounts receivable is calculated by subtracting the beginning accounts receivable from the ending accounts receivable:
Change in accounts receivable = Ending accounts receivable - Beginning accounts receivable
= $270,000 - $200,000
= $70,000
The change in accounts receivable represents the amount of credit sales made during the period.
Since $500,000 cash was collected from customer credit sales, we can deduct this amount from the change in accounts receivable to find the amount of sales on account:
Sales on account = Change in accounts receivable - Cash collected from credit sales
= $70,000 - $500,000
= -$430,000
The negative value indicates that Oral Corporation had a decrease in accounts receivable during the period, which means there was a decrease in sales on account.
Therefore, the correct answer is none of the options provided (a, b, c, or d).