Determining Cash ReceiptsDirect Method

Marshall Inc. had beginning balances (January 1) of $500,000 and $12,500 for accounts receivable and the allowance for doubtful accounts, respectively. During the year, the company had the following transactions.

Sales	$2,250,000
Write-off of accounts	2,500
Cash collections on account receivable	2,125,000
Bad debt expense recorded	7,000

1. Determine the cash receipts from customers reported in the operating activities section in the statement of cash flows assuming the direct method.

Answer

2. Reconcile sales to cash receipts from customers.

Sales	Answer
Change in accounts receivable balance	Answer
Account write-offs	Answer
Collection of accounts receivable previously written off	Answer
Cash collections	Answer