Answer to Question #242734 in Accounting for swismiss

Question

The total assets of Xerxes firm are P 350,000 of which P 50,000 is accounts receivable. Subsequently, P 22,500 of accounts receivable was collected. What is the new balance of its total assets?

Answer 1

Solution:

Total assets = 350,000

Accounts receivable = 50,000

Accounts receivables collected in cash = 22,500

Accounts receivable will reduce by 22,500

New account receivable = 50,000 – 22,500 = 27,500

Cash will increase by 22,500

New cash account = 22,500

 

There will be no change in Xerxes's total assets, since accounts receivable will reduce by 22,500, and the amount collected will increase the cash amount by the same figure. Therefore, the net effect will be zero.