Johnson, Inc. owns control over Kaspar, Inc. Johnson reports sales of $400,000 during 2021 while Kaspar reports $250,000. Kaspar transferred inventory during 2021 to Johnson at a price of $50,000. On December 31, 2021, 30% of the transferred goods are still held in Johnson's inventory. Consolidated accounts receivable on January 1, 2021 was $120,000, and on December 31, 2021 is $130,000. Johnson uses the direct approach in preparing the statement of cash flows.How much is cash collected from customers in the consolidated statement of cash flows?
A) $590,000.
B) $610,000.
C) $625,000.
D) $635,000.
E) $650,000.

Question

Quizplus · Accepted Answer

Consolidated sales = $400,000 + $250,000 = $650,000.Consolidated beginning accounts receivable = $120,000.Consolidated ending accounts receivable = $130,000.Cash collected from customers = Consolidated sales + Consolidated beginning accounts receivable - Consolidated ending accounts receivable= $650,000 + $120,000 - $130,000= $590,000.