Deluxe Hotels reported revenues of $570,000 for the year ended December 31, 2019. Accounts receivable at December 31, 2018 and 2019 were $67,000 and $47,000. If Deluxe uses the direct method of reporting operating cash flows, the company would report cash collected from customers of ________.

Question

Quizplus · Accepted Answer

The cash collected from customers is calculated by adjusting the revenue for the change in accounts receivable. Since accounts receivable decreased by $20,000 ($67,000 - $47,000), it means that more cash was collected than the revenue reported. Therefore, cash collected = $570,000 + $20,000 = $590,000.

Deluxe Hotels Reported Revenues of $570,000 for the Year Ended