Len corp. reported net sales of $300 million last year and generated a net income of $66.00 million. last year’s accounts receivable increased by $29 million. what is the maximum amount of cash that len corp. received from sales last year?
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Ответ:
Len Corp. received a maximum of $37 million of cash from sales.
Explanation:
The cash flow of a company is determined as follows: Net Income plus Depreciations plus/minus uses of cash.
The net income is the amount of cash obtained from sales, less all the costs and expenses needed in order to obtain those sales;The depreciations don't represent an exit of cash, they are just an accounting adjust, so we have to add that amount to the net income;The uses of cash are all the operations in assets and liabilities that requires or generates cash. Since accounts receivable have been increased by $29 million, from the $300 million of sales you have $29 million you're going to receive next year. So we have to subtract those $29 million from the $66 million, and the result is $37 million.Ответ:
The account is a temporary account.
Explanation: Allowance for doubtful accounts refers to the contra-asset accounts prepared to reflect the actual debtors that are expected to be paid.
Temporary accounts refers to those accounts the balance of which becomes zero at the end of the financial year due to the closing entries made. However, the allowance for doubtful accounts remain on the balance sheet if the expectancy of unpaid debtor remains as such.