Nicholas Company prepares its statement of cash flows using the direct method fo

Question

Nicholas Company prepares its statement of cash flows using the direct method for operating activities. For the year ended December 31, 2016, Nicholas Company reports the following activity:

Sales                                                                           $2,140,000
Decrease in accounts receivable                                    600,000
Increase in accounts payable                                            72,000
Increase in inventory                                                         48,000
Cost of good sold                                                          1,050,000
What is the amount of cash collections from customers reported by Nicholas Company for the year ended December 31, 2016?

$2,740,000

$2,010,000

$2,750,000

$1,530,000

$2,740,000

$2,010,000

$2,750,000

$1,530,000

Explanation / Answer

Cash collections from customers = 2140000+600000 = $2740000 Option 1 is correct

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