Question

19. In its accrual basis income statement for the year ended December 31, 2012, Nelson Company reported revenue of $3,500,000. Additional information is as follows: Accounts receivable-- Beg.

December 31, 2011 ............... $ 750,000

Net income for 2012 .................................. 140,000

Accounts receivable--End. December 31, 2012 ............... 1,010,000

Nelson should report cash collected from customers in its 2012 statement of cash flows (direct method) in the amount of

a. $3,240,000.

b. $3,100,000.

c. $3,380,000.

d. $3,760,000.

____ 20. Stiggins Corporation had the following account balances for 2012: December 31 January 1

Accounts Payable ...................... $67,200 $58,200

Prepaid Rent Expense .................. 24,600 37,200

Accounts Receivable (net) ............. 84,000 66,600

Stiggins' 2012 net income is $450,000. What amount should Stiggins include as net cash provided by operating activities in its 2012 statement of cash flows?

a. $436,200

b. $445,200

c. $453,600

d. $454,200

Answer 1

a. $3,240,000.

b. $445,200

Step-by-step explanation:

1. Particulars Amount

Beginning account receivable $750,000

Add: Revenue $3,500,000

Less: Ending account receivable $1,010,000

Cash collected from customer $3,240,000

2. Particulars Amount

Net income $450,000

Adjustment to reconcile net income

Increase account payable $9,000

Decrease prepaid rent expenses $12,600

Increase account receivable $17,400 $4,200

Net cash provided by operating activities $454,200