Mid-Town Auto Parts Company uses the direct method to prepare its statement of cash flows.Refer to the following information reported for 2019: 1.Sales Revenue,$520,000
2)Accounts Receivable,beginning balance,$99,000
3)Accounts Receivable,ending balance,$62,000
Compute the collections from customers.
A) $557,000
B) $458,000
C) $161,000
D) $359,000

Question

Quizplus · Accepted Answer

To compute the collections from customers using the direct method, you start with the sales revenue and adjust it for the change in accounts receivable. The formula is: Collections from Customers = Sales Revenue + Beginning Accounts Receivable - Ending Accounts Receivable. Plugging in the numbers: $520,000 + $99,000 - $62,000 = $557,000.

Mid-Town Auto Parts Company Uses the Direct Method to Prepare