On December 31, 2013, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from customers in its 2013 statement of cash flows (direct method) in the amount of:

Question

Quizplus · Accepted Answer

The cash collected from customers is calculated by adjusting sales for the change in accounts receivable. The increase in accounts receivable ($25,000 - $20,000 = $5,000) indicates that not all sales were collected in cash. Therefore, cash collected = Sales - Increase in Accounts Receivable = $210,000 - $5,000 = $205,000.

On December 31, 2013, Wellstone Company Reported Net Income of $70,000