Alexander Company reported an increase of $185,000 in its accounts receivable during the year. The company's statement of cash flows reported $500,000 of cash receipts from customers. What amount of net sales must Alexander have recorded?
A) $315,000.
B) $685,000.
C) $500,000.
D) $185,000

Question

Quizplus · Accepted Answer

The increase in accounts receivable ($185,000) represents the portion of cash receipts from customers that were not yet recorded as revenue. Thus, the cash receipts from customers ($500,000) + the increase in accounts receivable ($185,000) must equal the net sales. 
500,000 + 185,000 = 685,000 
Therefore, the amount of net sales must have been $685,000.

Alexander Company Reported an Increase of $185,000 in Its Accounts