Question

Sheffield Corp. had credit sales of $1696000. The beginning accounts receivable balance was $175000 and the ending accounts receivable balance was $297000. Using the direct method of reporting cash flows from operating activities, what were the cash collections from customers during the period

Answer 1

Answer:

$1,574,000

Explanation:

Cash collections from customers during the period using direct method is computed as;

= Credit sales + Beginning accounts receivables - Ending accounts receivables

= $1,696,000 + ($175,000 - $297,000)

= $1,692,000 - $122,000

= $1,574,000