a. If sales for the current year were $753,500 and accounts receivable decreased by $48,400 during the year, what was the amount of cash received from customers?
b. If income tax expense for the current year was $50,600 and income tax payable decreased by $5,500 during the year, what was the amount of cash payments for income taxes?
c. Briefly explain why the cash received from customers in (a) is different than sales.
Answer:
a. Sales……………………………………………………………………………………… $753,500
Plus decrease in accounts receivable balance…………………………………… 48,400
Cash received from customers……………………………………………………… $801,900
b. Income tax expense…………………………………………………………………… $ 50,600
Plus decrease in income tax payable……………………………………………… 5,500
Cash payments for income taxes…………………………………………………… $ 56,100
c. Because the customer paid more than the amount of sales for the period,
cash received from customers exceeded sales made on account by
$48,400 during the current year.