Maddox Industries reported sales of $170,000 on its income statement.During the year, accounts receivable decreased by $25,000 and accounts payable decreased by $35,000.Maddox uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.What is the amount of sales revenue adjusted to a cash basis for the year?

Question

Quizplus · Accepted Answer

The decrease in accounts receivable indicates that more cash was collected than sales made, so $25,000 is added to sales. The decrease in accounts payable does not affect cash collections from sales. Therefore, $170,000 + $25,000 = $195,000.

Maddox Industries Reported Sales of $170,000 on Its Income Statement