Question

During the year, X Company sold merchandise on account to customers for $408,000. The company collected...

During the year, X Company sold merchandise on account to customers for $408,000. The company collected $394,000 in cash from customers during the year. Which of these amounts appears on the Income Statement and which appears on the Statement of Cash Flows?

$394,000 appears on both statements
$14,000 appears on the Income Statement and $394,000 appears on the Statement of Cash Flows
$408,000 appears on the Income Statement and $394,000 appears on the Statement of Cash Flows
$408,000 appears on both statements
$394,000 appears on the Income Statement and $408,000 appears on the Statement of Cash Flows
$14,000 appears on both statements

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Answer #1

Answer:

$408,000 appears on the Income Statement and $394,000 appears on the Statement of Cash Flows

Explanation to the answer:

Company X sold merchandise on account to customers for $408,000 so in incomes statement sales revenue form customer x =$408,000

The cash collection from the customer is $394,000 and in cash flow statement only cash potion will be shown so $394,000 will be appeared as the collection from customers under operating activity in cash flow statement.

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