The balance in Accounts Receivable at the beginning of the year amounted to $3,040. During the year, $9,880 of credit sales were made to customers. If the ending balance in Accounts Receivable amounted to $1,980, and uncollectible accounts expense amounted to $840, what is the amount of cash inflow from customers that would appear in the operating activities section of the cash flow statement?

Question

Quizplus · Accepted Answer

The cash inflow from customers can be calculated by subtracting the decrease in Accounts Receivable from credit sales made during the year. 
Credit sales = $9,880
Ending balance in Accounts Receivable = $1,980
Beginning balance in Accounts Receivable = $3,040
Decrease in Accounts Receivable = $3,040 - $1,980 = $1,060
Cash inflow from customers = $9,880 - $1,060 = $8,820
Since the question is asking for the cash inflow before considering uncollectible accounts expense, we need to add back the uncollectible accounts expense.
Cash inflow from customers before uncollectible accounts expense = $8,820 + $840 = $10,660
Therefore, the correct answer is D, $10,940.

The Balance in Accounts Receivable at the Beginning of the Year