Jones Company requires prepayment from all customers.Jones Company reported revenue of $258,000 on its 2016 income statement.The balance in its Unearned Revenue account was $12,000 at the start of 2016 and $4,000 at the end of the year.Based on this information alone,the amount of cash that Jones collected from customers for 2016 was $250,000.

Question

Quizplus · Accepted Answer

The amount of cash collected from customers is equal to the revenue reported on the income statement plus the decrease in the Unearned Revenue account balance. In this case, the revenue reported on the income statement is $258,000, and the decrease in the Unearned Revenue account balance is $12,000 - $4,000 = $8,000. Therefore, the amount of cash collected from customers is $258,000 + $8,000 = $250,000.

Jones Company Requires Prepayment from All Customers