Avatar Company uses the direct method to prepare its cash flow statement.Refer to the following information reported for the year 2016:
1) Sales revenue, $519,000
2) Accounts receivable, beginning balance, $96,000
3) Accounts receivable, ending balance, $57,000

In the operating activities section of the cash flow statement, what amount will be shown for collections from customers?

Question

Avatar Company uses the direct method to prepare its cash flow statement.Refer to the following information reported for the year 2016:
1) Sales revenue, $519,000
2) Accounts receivable, beginning balance, $96,000
3) Accounts receivable, ending balance, $57,000

In the operating activities section of the cash flow statement, what amount will be shown for collections from customers?

Quizplus · Accepted Answer

Collections from customers is calculated as sales revenue plus the decrease in accounts receivable. In this case, sales revenue is $519,000 and the decrease in accounts receivable is $96,000 - $57,000 = $39,000. Therefore, collections from customers is $519,000 + $39,000 = $558,000.

Avatar Company Uses the Direct Method to Prepare Its Cash