Bata Ltd.made sales of $500,000 during 2013.Accounts receivable on January 1, 2013, were $65,000, and on December 31st were $72,000.If Bata prepares their cash flow statement using the direct method, what was the cash collected from customers for the year for Bata?

Question

Quizplus · Accepted Answer

To calculate cash collected from customers during the year, adjustments must be made to sales revenue for the change in accounts receivable. Using the direct method, the cash collected from customers is calculated as follows:

Cash collected from customers = Sales revenue + Decrease in accounts receivable - Increase in accounts receivable
Cash collected from customers = $500,000 + ($65,000 - $72,000)
Cash collected from customers = $500,000 - $7,000
Cash collected from customers = $493,000

Therefore, the correct choice is B) $493,000.

Bata LtdMade Sales of $500,000 During 2013