Newark Company Has Provided the Following Information: • Cash Sales

Multiple Choice

Newark Company has provided the following information: • Cash sales, $450,000
• Credit sales, $1,350,000
• Selling and administrative expenses, $330,000
• Sales returns and allowances, $90,000
• Gross profit, $1,360,000
• Increase in accounts receivable, $55,000
• Bad debt expense, $33,000
• Sales discounts, $43,000
• Net income, $1,030,000
What is the effect of collections from customers on cash flow from operating activities, using the indirect method?

A) Cash flow increased $975,000.
B) Cash flow increased $395,000.
C) Cash flow decreased $55,000.
D) Cash flow increased $450,000.