Question

The balance in Accounts Receivable at the beginning of the year amounted to $3,360. During the year, $10,640 of credit sales were made to customers. If the ending balance in Accounts Receivable amounted to $2,200, and uncollectible accounts expense amounted to $940, what is the amount of cash inflow from customers that would appear in the operating activities section of the cash flow statement

Answer 1

Answer: $11,800

Explanation:

Cashflow inflow from Customers is calculated as follows

Cash flow from customers = beginning account receivable + Credit sales - ending Account receivable.

Plugging in figures would give us,

= 3,360 + 10,640 - 2,200

= $11,800

$11,800 is the amount of cash inflow from customers that would appear in the operating activities section of the cash flow statement.

You may wonder what happened to the uncollectible accounts expense amounted of $940. It was meant to confuse you. That figure is dealt with before the ending Account Receivable balance is computed.