Boulevard, Inc. uses the direct method to prepare its statement of cash flows. Use the following information reported for 2019:
Sales Revenue, $45,000
Interest Revenue, $800
Accounts Receivable, beginning balance, $13,100
Accounts Receivable, ending balance, $27,000
There were no amounts reported for Interest Receivable.
Compute the total cash receipts.

Question

Boulevard, Inc. uses the direct method to prepare its statement of cash flows. Use the following information reported for 2019: 
Sales Revenue, $45,000
Interest Revenue, $800
Accounts Receivable, beginning balance, $13,100
Accounts Receivable, ending balance, $27,000
There were no amounts reported for Interest Receivable.
Compute the total cash receipts.

Quizplus · Accepted Answer

To compute the total cash receipts using the direct method, we start with the sales revenue and adjust it for the change in accounts receivable. The sales revenue is $45,000, and the interest revenue is $800, giving a total revenue of $45,800. The accounts receivable increased from $13,100 to $27,000, which means the company did not collect $13,900 ($27,000 - $13,100) in cash for its sales. Therefore, the total cash receipts from customers are $45,800 - $13,900 = $31,900. Interest revenue does not require adjustment since there's no change in interest receivable.