Bookworm Booksellers reported sales revenue of $350,000 for the fiscal year ended July 31.The accounts receivable balance at the beginning of the year was $26,000 and $35,000 at the end of the year.On the statement of cash flows,what amount of cash would be shown as collected from customers?

Question

Quizplus · Accepted Answer

To calculate the cash collected from customers, we need to take the sales revenue reported by Bookworm Booksellers ($350,000) and adjust for changes in the accounts receivable balance. Beginning accounts receivable of $26,000 means that $26,000 worth of sales from the previous year were still outstanding and had not been collected yet. During the year, Bookworm Booksellers also extended credit to new customers and made sales on credit to existing customers, resulting in an ending accounts receivable balance of $35,000. Therefore, the cash collected from customers during the year would be:
Sales revenue ($350,000) - Increase in accounts receivable ($35,000 - $26,000) = $341,000. The correct answer is B.

Bookworm Booksellers Reported Sales Revenue of $350,000 for the Fiscal