Hamilton Company reported an increase of $370,000 in its accounts receivable during the year 2014. The company's statement of cash flows for 2014 reported $1 million of Cash receipts from customers. What amount of net sales must Hamilton have recorded in 2014?

Question

Quizplus · Accepted Answer

The increase in accounts receivable represents sales that were made but not yet received in cash. Therefore, to calculate net sales, we need to add the increase in accounts receivable to the cash receipts from customers.

Net sales = Cash receipts from customers + Increase in accounts receivable
Net sales = $1 million + $370,000
Net sales = $1,370,000

Therefore, the correct answer is choice B.

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