1. Suppose Columbia Sportswear Company had accounts receivable of $206,024,000 a
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Question
1. Suppose Columbia Sportswear Company had accounts receivable of $206,024,000 at the beginning of a recent year, and $267,653,000 at year-end. Sales revenue was $1,095,307,000 for the year.
What is the amount of cash receipts from customers?
2. Macgregor Company completed its first year of operations on December 31, 2017. Its initial income statement showed that Macgregor had revenues of $197,800 and operating expenses of $85,700. Accounts receivable and accounts payable at year-end were $67,900 and $22,300, respectively. Assume that accounts payable related to operating expenses. Ignore income taxes.
Compute net cash provided by operating activities using the direct method.
Cash receipts from customers$
Explanation / Answer
1)
Cash receipts from customers
= Opening balance + Sales revenue - Closing balance
= $206,024,000 + $1,095,307,000 - $267,653,000
= $ 1,033,678,000
2)
Cash provided by operating activities
= Cash receipts from customers - Cash paid to suppliers
Cash receipts
= Revenue - Accounts receivable
= $ 197,800 - $ 67,900
= $ 129,900
Cash paid to suppliers
= Operating expenses - Accounts payable
= $ 85,700 - $ 22,300
= $ 63,400
So, Cash provided by operating activities
= $ 129,900 - $ 63,400
= $ 66,500.
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