SHE Management Corporation had accounts receivable of $105,000 and $120,000 on January 1, 2020, and December 31, 2020, respectively. Sales on account in 2020 were $310,000. The amount of
Collections o be reported on the statement of cash flows under the operating activities is:

Question

Quizplus · Accepted Answer

To determine the amount of collections to be reported on the statement of cash flows under the operating activities, we need to calculate the change in accounts receivable from the beginning of the period to the end of the period.

Change in Accounts Receivable = Ending Accounts Receivable - Beginning Accounts Receivable 
= $120,000 - $105,000 
= $15,000

Since accounts receivable is an asset, an increase in accounts receivable decreases cash flow from operating activities. Therefore, the amount of collections to be reported on the statement of cash flows under the operating activities is:

Collections = Sales on Account - Change in Accounts Receivable 
= $310,000 - $15,000 
= $295,000

Therefore, the correct answer is D.

SHE Management Corporation Had Accounts Receivable of $105,000 and $120,000