Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2016, and $200,900 at December 31, 2017.Sales reported on Sweetson's 2017 income statement amounted to $2,350,000.What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2017 statement of cash flows assuming that the direct method is used?
A) $2,369,400
B) $2,350,000
C) $2,771,200
D) $2,330,600

Question

Sweetson Enterprises' comparative balance sheets included accounts receivable of $220,300 at December 31, 2016, and $200,900 at December 31, 2017.Sales reported on Sweetson's 2017 income statement amounted to $2,350,000.What is the amount of cash collections that Sweetson will report in the Operating Activities category of its 2017 statement of cash flows assuming that the direct method is used? ​
A) $2,369,400
B) $2,350,000
C) $2,771,200
D) $2,330,600

Quizplus · Accepted Answer

To calculate cash collections, start with sales and adjust for the change in accounts receivable: $2,350,000 + ($220,300 - $200,900) = $2,350,000 + $19,400 = $2,369,400.

Sweetson Enterprises' Comparative Balance Sheets Included Accounts Receivable of $220,300