Dense Company's income statement showed revenues of $275000 and operating expenses of $135000. Accounts receivable decreased by $40000 and accounts payable increased by $35000 during the year.
Instructions
Compute (a) cash receipts from customers and (b) cash payments for operating expenses using the direct method.

Direct Method

An accounting method used to prepare the cash flow statement, which shows actual cash inflows and outflows from operating activities.

Operating Expenses

Expenditures that a business incurs through its normal business operations, such as rent, utilities, and salaries, excluding production costs.

Accounts Receivable

Receivables from clients for services or goods delivered by a company but not yet compensated.