Question

Hong Kong Clothiers reported revenue of $5,050,000 for its year ended December 31, 2021. Accounts receivable at December 31, 2020 and 2021, were $321,000 and $354,300, respectively. Using the direct method for reporting cash flows from operating activities, Hong Kong Clothiers would report cash collected from customers of:

Answer 1

The answer is $5,016,700

Step-by-step explanation:

Cash collected from customers is:

Revenue $5,050,000

Less: Increase in accounts receivable

Revenue is

Receivables at the beginning of the year is $321,000

Receivables at the end of the year is $354,300

There is an increase in the accounts receivable and the increase is

$354,300 - $321,000

$33,300

Therefore, amount collected from customers is:

$5,050,000 - $33,300

=$5,016,700