Question

Tropical Tours reported revenue of $403,000 for its year ended December 31, 2021. Accounts receivable at December 31, 2020 and 2021, were $35,100 and $31,700, respectively. Using the direct method for reporting cash flows from operating activities, Tropical Tours would report cash collected from customers of: Multiple Choice $406,400. $403,000. $399,600. $438,100.

Answer 1

$406,400

Step-by-step explanation:

The direct method of cash flow may be used to determine the amount of cash collected by reason of the movement in he accounts receivables balance at the start and end of a period.

This may be show mathematically as

opening balance + revenue - cash collected = closing balance

$35,100 + $403,000 - cash collected = $31,700

cash collected = $35,100 + $403,000 - $31,700

= $406,400