During 2010, Unruh Company had $160,000 in cash sales and $1,200,000 in credit sales. The accounts receivable balances were $180,000 and $212,000 at December 31, 2009 and 2010, respectively. Using the direct method of reporting cash flows from operating activities, what was the total cash collected from all customers during 2010?
A) $1,168,000
B) $1,392,000
C) $1,360,000
D) $1,328,000

Question

Quizplus · Accepted Answer

To calculate the total cash collected from all customers during 2010 using the direct method, we need to start with the credit sales and adjust for changes in the accounts receivable balance. Here's how:

Cash collected from credit sales = credit sales - increase in accounts receivable
Cash collected from credit sales = $1,200,000 - ($212,000 - $180,000)
Cash collected from credit sales = $1,168,000

In addition, we know that there were $160,000 in cash sales.

Therefore, the total cash collected from all customers during 2010 was:

Total cash collected = cash sales + cash collected from credit sales
Total cash collected = $160,000 + $1,168,000
Total cash collected = $1,328,000

So the correct answer is option D, $1,328,000.

During 2010, Unruh Company Had $160,000 in Cash Sales and $1,200,000