Johnson, Inc.owns control over Kaspar, Inc.Johnson reports sales of $400,000 during 2018 while Kaspar reports $250,000.Kaspar transferred inventory during 2018 to Johnson at a price of $50,000.On December 31, 2018, 30% of the transferred goods are still held in Johnson's inventory.Consolidated accounts receivable on January 1, 2018 was $120,000, and on December 31, 2018 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 = $650,000Less: Beginning accounts receivable = $120,000Add: Ending accounts receivable = $130,000Cash collected from customers = $650,000 - $120,000 + $130,000 = $660,000Less: Inventory transferred from Kaspar = $50,000Inventory still held by Johnson = $50,000 * 30% = $15,000Cash collected from customers in the consolidated statement of cash flows = $660,000 - $15,000 = $645,000