Question

Accounts receivable arising from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is:
A. $118,000.
B. $110,000.
C. $102,000.
D. $150,000.

Credit memos from the bank
decrease a bank customer's account
are used to show a bank service charge
show that a company has deposited a customer's NSF check
show the bank has collected a note receivable for the customer

Answer 1

Answer: $118,000 ;

show the bank has collected a note receivable for the customer

Explanation:

Based on the information given in the question, we can see that there is a reduction in the accounts receivables which will be:

= $40,000 - $32,000

= $8,000

This will then be added to the bet income in order to get the value for the cash flows from operating activities which will be:

= $110,000 + $8,000

= $118,000

Credit memo shows the payment or interest for a particular thing. This can be used to show that a particular bank has received a note, also can be used to show that an interest has been earned on the deposit made. Therefore, the correct option is "show the bank has collected a note receivable for the customer"