Tropical Tours reported revenue of $400,000 for its year ended December 31, 2009. Accounts receivable at December 31, 2008 and 2009, were $35,000 and $32,000, respectively. Using the direct method for reporting cash flows from operating activities, Tropical Tours would report cash collected from customers of:

Question

Quizplus · Accepted Answer

The cash collected from customers is calculated by adjusting the revenue for the change in accounts receivable. Since accounts receivable decreased by $3,000 ($35,000 - $32,000), it means that more cash was collected than the revenue reported. Therefore, cash collected = $400,000 + $3,000 = $403,000.

Tropical Tours Reported Revenue of $400,000 for Its Year Ended