Question

Bailey Co earns $12,117 of revenue on account and in $7,682 cash revenue transactions in Year 1. Cash collections of receivables amount to $6,687 in Year 1 with the remainder being collected in Year 2. Based on this information alone the company’s financial statements would show Cash inflows for Year 1 $__________

Answer 1

Cash inflows for the year is $14,369.00

Step-by-step explanation:

Cash inflows in year comprise of the cash revenue and the portion on revenue on account(accounts receivable), received in the course of the year.

Cash revenue=$7,682

Cash collections in respect of accounts receivable= $6,687

Cash inflows during the year=$7,682+$6,687=$14,369.00

The balance yet to be collected and expected to be collected in year 2 is the difference between the cash collections and total accounts receivable

balance of accounts receivable =$12,117-$6,687=$5,430.00