Baird Corp. had beginning Accounts Receivable of $254,000 and ending Accounts Receivable of $228,000. Assume total credit sales were $1,440,000.Required:a) What amount of cash was collected from customers?b) How would the information provided in this question be reported on the statement of cash flows using the:1) Indirect method? 2) Direct method?
What will be an ideal response?
a) $1,466,000
b) (1) The $26,000 decrease in accounts receivable would be added to net income in the operating activities section.
a) (2) A cash inflow from customers of $1,466,000 would be reported as a cash inflow from operating activities.
a) (1)
Decrease in accounts receivable = Beginning balance of accounts receivable of $254,000 ?- Ending balance of accounts receivable of $228,000 = $26,000
Cash collected from customers = Sales of $1,440,000 + Decrease in accounts receivable of $26,000 = $1,466,000
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