Boulevard,Inc.uses the direct method to prepare its statement of cash flows.Use the following information reported for 2019: Sales Revenue,$43,000
Interest Revenue,$600
Accounts Receivable,beginning balance,$13,400
Accounts Receivable,ending balance,$26,000
There were no amounts reported for Interest Receivable.
Compute the total cash receipts.
A) $26,000
B) $56,400
C) $31,000
D) $13,400

Question

Quizplus · Accepted Answer

Using the direct method, total cash receipts are calculated by adding up all the inflows of cash from operating activities. In this case, the only inflow of cash from operating activities is sales revenue. Therefore, total cash receipts are $43,000. The beginning and ending balances of accounts receivable are used to calculate the change in accounts receivable, which is used separately in the cash flow statement to calculate the cash received from customers. Interest revenue is reported separately and is not included in total cash receipts. Therefore, the correct answer is C, $31,000.