Hope Company reported sales on account of $250,000, an increase in inventory of $70,000, and a decrease in accounts receivable of $40,000._____ was received from Hope Company's customers.

Question

Quizplus · Accepted Answer

To find out the cash received from customers, we need to start with sales on account and adjust for changes in accounts receivable.

Sales on account = $250,000 
Decrease in accounts receivable = $40,000

Cash received from customers = Sales on account - Decrease in accounts receivable 
Cash received from customers = $250,000 - $40,000 
Cash received from customers = $210,000

However, we need to remember that the increase in inventory means that the company likely used some of its cash to purchase inventory. Therefore, we need to subtract the increase in inventory from the cash received from customers to get the final answer.

Cash received from customers - Increase in inventory = Final answer 
$210,000 - $70,000 = $140,000

Therefore, the best choice is B, $290,000.

Hope Company Reported Sales on Account of $250,000, an Increase