Final answer:
To calculate the cash collected from credit customers during the year, subtract the increase in net accounts receivable from the total credit sales made. The transaction would be reported in the cash flow statement as an increase in cash from collecting accounts receivable.
Step-by-step explanation:
The increase in net accounts receivable represents the amount of credit sales made during the year that has not yet been collected in cash. To calculate the cash collected from credit customers, we need to take into account the change in net accounts receivable. If net accounts receivable increased by $220,000, it means that $220,000 of credit sales were made during the year but not yet collected.
We can calculate the cash collected from credit customers by subtracting the increase in net accounts receivable from the total credit sales made during the year. Let's say the total credit sales made during the year were $500,000. So the cash collected from credit customers would be $500,000 - $220,000 = $280,000.
The transaction would be reported in the cash flow statement, specifically in the operating activities section, as an increase in cash from collecting accounts receivable.