Aboard Company began the current year with the following: During the current year,the following events occurred:
At the end of the current year,Aboard showed a balance in gross accounts receivable (before the allowance for doubtful accounts)of $16,800.
What amount would be shown as an operating cash inflow in the statement of cash flows under the indirect method?
A) $21,000
B) $22,000
C) $30,000
D) $28,200

Question

Aboard Company began the current year with the following:  During the current year,the following events occurred:
 At the end of the current year,Aboard showed a balance in gross accounts receivable (before the allowance for doubtful accounts)of $16,800.
What amount would be shown as an operating cash inflow in the statement of cash flows under the indirect method?
A) $21,000 
B) $22,000 
C) $30,000 
D) $28,200

Quizplus · Accepted Answer

Under the indirect method, the operating cash inflow related to accounts receivable is calculated by adjusting net income for changes in accounts receivable.

Beginning accounts receivable = $21,000 
Ending accounts receivable = $16,800

Therefore, the decrease in accounts receivable is $4,200 ($21,000 - $16,800).

Thus, operating cash inflow related to accounts receivable = Decrease in accounts receivable + Bad debt expense 
= $4,200 + $18,000 
= $22,200

Therefore, the answer is B ($22,000).

Aboard Company Began the Current Year with the Following