Question

Cash Received from Customers—Direct Method

Sales reported on the income statement were $112,000. The accounts receivable balance decreased $10,500 over the year.

Determine the amount of cash received from customers.

Answer 1

Answer:

The cash received or collected from the customers amounts to $122,500

Explanation:

Cash receipts is the sum of all the cash amounts collected or received from the sale of the goods and on accounts receivable.

Cash received or collected from the customer is computed as:

Cash collected from customer = Sales + Decrease in accounts receivable

where

Sales amounts to $112,000

Decrease in accounts receivable amounts to $10,500

Putting the values above:

= $112,000 + $10,500

= $122,500

Therefore, the cash amounts to $122,500, received from customers.