Response to the following problem:
Columbia Motors is having a bad year. Net income is only $37,000. Also, two important overseas customers are falling behind in their payments to Columbia, and Columbia's accounts receivable are ballooning. The company desperately needs a loan. The Columbia board of directors is considering ways to put the best face on the company's financial statements. Columbia's bank closely examines cash flow from operations. Daniel Peavey, Columbia's controller, suggests reclassifying as long-term the receivables from the slow-paying clients. He explains to the board that removing the $80,000 rise in accounts receivable from current assets will increase net cash provided by operations. This approach may help Columbia get the loan.