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 are
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 are
A) $56,000 
B) $52,000 
C) $60,000 
D) $45,000

Quizplus · Accepted Answer

To calculate cash collections from customers, we need to start with the sales revenue and adjust for any changes in accounts receivable. Considering the selected account balances provided, sales revenue is $60,000 ($50,000 + $10,000). We can see that accounts receivable decreased from $15,000 to $5,000, indicating that $10,000 was collected from customers during the period. Therefore, the cash collections from customers are $60,000 - $10,000 = $50,000. Therefore, the correct answer is C ($60,000).

The Following Selected Account Balances Appeared on the Financial Statements