Question

32. On December 31, 2016, 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 2016 statement of cash flows (direct method) in the amount of: a.$215,000.

Answer 1

$205,000

Step-by-step explanation:

Sales = $210,000

Opening accounts receivables = $20,000

Ending accounts receivables = $25,000

Using the formula

Opening accounts receivables + Sales - Cash collected = closing accounts receivables

$20,000 + $210,000 - Cash collected = $25,000

Cash collected = $20,000 + $210,000 - $25,000

= $205,000

The cash collected from sales reduces the balance in the accounts receivables.