# Cash received from customersâ€”direct method Sales reported on the income statement were $480,000. The accounts receivable balance increased$54,000 over the year. Determine the amount of cash received from customers.

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 16, Problem 16.6APE
Textbook Problem

## Cash received from customers—direct methodSales reported on the income statement were $480,000. The accounts receivable balance increased$54,000 over the year. Determine the amount of cash received from customers.

Expert Solution
To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: The direct method uses the cash basis of accounting for the preparation of the statement of cash flows. It takes into account those revenues and expenses for which cash is either received or paid.

Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

The below table shows the way of calculation of cash flows from operating activities:

 Cash flows from operating activities (Direct method) Add: Cash receipts. Cash receipt from customer Less: Cash payments: To supplier For operating expenses Income tax expenses Net cash provided from or used by operating activities

To Determine: The amount of cash received from customers.

### Explanation of Solution

Cash receipts from customers represents the total amount of cash received from the sales as well...

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution

Find more solutions based on key concepts
Show solutions
In what ways is economics a science?

Principles of Economics (MindTap Course List)

Explain why an economys income must equal its expenditure.

Brief Principles of Macroeconomics (MindTap Course List)

List the 10 steps in the accounting cycle.

College Accounting, Chapters 1-27

PRICE AND YIELD An 8% semiannual coupon bond matures in 5 years. The bond has a face value of 1,000 and a curre...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)