The following selected account balances appeared on the financial statements of the Washington Company: The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash collections from customers were
A) $56,000
B) $52,000
C) $60,000
D) $45,000

Question

The following selected account balances appeared on the financial statements of the Washington Company:  The Washington Company uses the direct method to calculate net cash flow from operating activities.
Cash collections from customers were
A) $56,000 
B) $52,000 
C) $60,000 
D) $45,000

Quizplus · Accepted Answer

To calculate cash collections from customers, we need to use the formula: 
Cash collections from customers = Revenue + Decrease in Accounts Receivable - Increase in Accounts Receivable 
Using the selected account balances, we have: 
Cash collections from customers = $80,000 + (-$12,000) - $8,000 
Cash collections from customers = $60,000 
Therefore, the correct answer is C.

The Following Selected Account Balances Appeared on the Financial Statements