The Company's activities for the year ended December 31, 2021 included the following: • Income tax expense for the year was $30,000.
• Sales for the year were $650,000.
• Accounts payable decreased $10,000 in 2021.
• Selling and administration expenses for the year totaled $200,000.
• Accounts receivable increased $20,000 in 2021.
• The Company's cost of goods sold in 2021 was $325,000.
• The Company's inventory decreased $15,000 during the year.
What is the cash receipts from customers under the direct method?

Question

Quizplus · Accepted Answer

The cash receipts from customers can be calculated by adjusting sales for changes in accounts receivable. Sales were $650,000, and accounts receivable increased by $20,000, indicating that cash receipts were $650,000 - $20,000 = $630,000.

The Company's Activities for the Year Ended December 31, 2021