Question

Suppose Columbia Sportswear Company had accounts receivable of $306,384,000 at January 1, 2022, and $228,302,000 at December 31, 2022. Assume sales revenue was $1,309,463,000 for the year 2022.

What is the amount of cash receipts from customers in 2022?

Answer 1

This is a problem of cash flow from customers. According to the cash flow direct method formula, the amount of cash received from customers is calculated by adjusting total sales shown in the income statement for the movement in the customer accounts receivable balances (AR) shown in the balance sheet. The cash flow direct method formula is as follows:

Receipts = Sales + Beginning AR - Ending AR

where Receipts are the cash receipts from customers, Sales are the sales revenue, Beginning AR are the accounts receivable at the beginning of the period, and Ending AR are the accounts receivable at the end of the period. We can use the given information to plug in the values and solve for the unknown. For the year 2022, we have:

Receipts = $1,309,463,000 + $306,384,000 - $228,302,000

= $1,387,545,000

The amount of cash receipts from customers in 2022 is $1,387,545,000.

Step-by-step explanation: