Wister Corporation had net sales of $462,000 for the just completed year.Shown below are the beginning and ending balances of various Wister accounts: Wister prepares its statement of cash flows using the direct method.On its statement of cash flows,what amount should Wister show for its net sales adjusted to a cash basis (i.e. ,cash received from sales)?
$$\begin{array} { l r r }
& \text { Ending } & \text { Beginning } \
\text { Cash................... } & \$ 105,000 & \$ 132,000 \
\text { Accounts receivable...... } & \$ 168,000 & \$ 142,000 \
\text { Inventory................. } & \$ 472,000 & \$ 536,000 \
\text { Accounts payable........ } & \$ 74,000 & \$ 91,000 \
\text { Retained earnings....... } & \$ 364,000 & \$ 292,000
\end{array}$$
A)$488,000
B)$436,000
C)$462,000
D)$445,000

Question

Wister Corporation had net sales of $462,000 for the just completed year.Shown below are the beginning and ending balances of various Wister accounts: Wister prepares its statement of cash flows using the direct method.On its statement of cash flows,what amount should Wister show for its net sales adjusted to a cash basis (i.e. ,cash received from sales)?
$$\begin{array} { l r r } 
& \text { Ending } & \text { Beginning } \
\text { Cash................... } & \$ 105,000 & \$ 132,000 \
\text { Accounts receivable...... } & \$ 168,000 & \$ 142,000 \
\text { Inventory................. } & \$ 472,000 & \$ 536,000 \
\text { Accounts payable........ } & \$ 74,000 & \$ 91,000 \
\text { Retained earnings....... } & \$ 364,000 & \$ 292,000
\end{array}$$
A)$488,000
B)$436,000
C)$462,000
D)$445,000

Quizplus · Accepted Answer

To adjust net sales to a cash basis, we need to account for changes in accounts receivable. The accounts receivable increased by $26,000 ($168,000 - $142,000), indicating that not all sales were collected in cash. Therefore, cash received from sales is $462,000 (net sales) - $26,000 (increase in accounts receivable) = $436,000.

Wister Corporation Had Net Sales of $462,000 for the Just