Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2009. The company's statement of cash flows for 2009 reported $1 million of cash received from customers. What amount of net sales must Hamilton have recorded in 2009?
A) $630,000.
B) $1,370,000.
C) $1,000,000.
D) $370,000

Question

Quizplus · Accepted Answer

The increase in accounts receivable of $370,000 indicates that not all of the cash received from customers has been recognized as revenue, as some sales were made on credit. Using the formula: Net Sales - Increase in Accounts Receivable = Cash Received from Customers
we can determine that:
Net Sales - $370,000 = $1,000,000
Net Sales = $1,370,000

Hamilton Company Reported an Increase of $370,000 in Its Accounts