Question

Molino Inc. reported sales revenue of $2 million for 2020. Accounts receivable decreased $200,000 and accounts payable increased $300,000. Compute cash receipts from customers, assuming that the receivable and payable transactions related to operat

Answer 1

Cash Receipt from Customers = $2,200,000

Step-by-step explanation:

When the balance of Accounts receivables decrease that means customers have paid. Now to calculate Cash Received we take the sales revenue and add the decrease in Account receivable because this means that cash collected is $200,000 more than the sales Revenue.

This also means that the sales revenue is fully collected and on top of that $200,000 of what was owing is collected so total collection is the sum of sales plus the decrease.

Collections = $2,000,000 + $200,000 = $2,200,000

Answer 2

Cash Receipt from Customers = Sales Revenue - Accounts Recievable (add since it’s a decrease)= 2000000 + 200000= 2,200,000