Answer:
Based on this information, the amount of cash flow from operating activities that would appear on the Year 2 statement of cash flows is:
= $97,000.
Explanation:
a) Data and Calculations:
Accounts Receivable balance on January 1, Year 2 = $16,000
Allowance for Doubtful Accounts balance on January 1, Year 2 = $0
Service Revenue on credit during Year 2 = $104,000
Cash collected from Accounts Receivable = $97,000
Accounts Receivable balance on December 31, Year 2 = $23,000
Allowance for Doubtful Accounts balance on December 31, Year 2 = $2,080 ($104,000 * 2%)
Net Accounts Receivable balance on December 31, Year 2 = $20,920 ($23,000 - $2,080)
b) The $97,000 is the actual cash inflow received from customers during Year 2. It increases the cash inflows and forms part of the operating activities section of the Statement of Cash Flows for Year 2 under the direct method.
