Question

During the current year, Tachnic, Inc., made cash sales of $289,000 and credit sales of $472,000. During the year, accounts receivable decreased by $32,000.
a-1. Compute for the current year the amount of net sales reported as revenue in the income statement.
a-2. Compute for the current year the amount of cash received from collecting accounts receivable.
a-3. Compute for the current year the amount of cash received from customers. Assume that the credit sales amount has been collected during the current year.

Answer 1

Answer:

(a1) $761,000

(a2) $504,000

(a3) $793,000

Explanation:

(a-1) Amount of net sales reported as revenue in the income statement:

= Cash sales + Credit sales

= $289,000 + $472,000

= $761,000

(a-2) Amount of cash received from collecting accounts receivable:

= Credit sales + Decrease in accounts receivable

= $472,000 + $32,000

= $504,000

(a-3) Amount of cash received from customers:

= Cash sales + Amount of cash received from collecting accounts receivable

= $289,000 +  $504,000

= $793,000