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Why cash collected from customers differed from sales

Problem: The following information was taken from the 2005 financial statement of the AB Corporation:

Accounts receivable, Jan 1, 2005      $30,000
Accounts receivable, Dec 31, 2005    $40,000
Sales ( all credit sales)                   $480,000

Note: No accounts receivable were written off or recovered during the year.

Q1. Determine the cash collected from customers by the AB Corporation in 2005

Q2. Comment on why cash collected from customers differed from sales.

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Finance Basics: Why cash collected from customers differed from sales

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