On its current year income statement, Vegas Parties, Inc. reported sales revenue of $945,000. Changes occurred in several balance sheet accounts, including the following: Accounts receivable: $90,000 decrease Unearned revenue: 75,000 increase What amount should Vegas report as cash received from customers in its current year statement of cash flows prepared using the direct method?

Question

Julian Bauer

Business

7 December, 08:36

On its current year income statement, Vegas Parties, Inc. reported sales revenue of $945,000. Changes occurred in several balance sheet accounts, including the following: Accounts receivable: $90,000 decrease Unearned revenue: 75,000 increase What amount should Vegas report as cash received from customers in its current year statement of cash flows prepared using the direct method?

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Van Mcconnell · Answer 1

1,110,000

Explanation:

Cash Flow statement is a presentation of cash inflows and outflows during a period.

Cash Flow statement is prepared using cash basis of accounting which records transactions as per the receipt and payment of cash.

In the given case, reduction in debtors balance indicates such payment must have been received.

Similarly, unearned revenue means income received in advance.

Since both are cash receipts, both shall be included in cash received from customers in it's current year statement of cash flows prepared using direct method.

Cash Received from customers = $945,000 + $90,000 + 75,000

= 1,110,000