Ravenna Company is a merchandiser that uses the indirect method to prepare the operating activities section of its Statement of Cash Flows. Its balance sheet for the year is as follows:

	Ending Balance	Beginning Balance
Cash	$ 48,000	$ 57,000
Accounts receivable	41,000	44,000
Inventory	55,000	50,000
Property, plant & equipment	150,000	140,000
Less accumulated depreciation	<50,000>	<35,000>
Total Assets	$ 244,000	$ 256,000
Accounts payable	$ 32,000	$ 57,000
Income taxes payable	25,000	28,000
Bonds payable	60,000	50,000
Common stock	70,000	60,000
Retained earnings	57,000	61,000
Total liabilities & stockholders equity	$ 244,000	$ 256,000

During the year Ravenna paid a $6,000 cash dividend and it sold a piece of equipment for $3,000 that had originally cost $6,000 and had accumulated depreciation of $4,000. The company did not retire any bonds or purchase any of its own common stock during the year.

REQUIRED:

1. Using a T-account analysis for Accounts Receivable Account If the company credited sales and debited accounts receivable for $600,000 during the year, what is the total amount of credits recorded in accounts receivable during the year? What does the amount of these credits represent?

2. What is the amount and direction (i.e. + or -) of the accounts receivable adjustment to net income in the operating activities section of the statement of cash flows? What does this adjustment represent?