Sales on credit and cash sale ( video below)

You are given the following information:

Receivables at 1 January 20X5                                                        $2,500

Receivables at 31 December 20X5                                                 $2,250

Total receipts during 20X5 (including cash sales of $1,250)    $21,250

What is the figure for sales on credit during 20X5?

Answer

Step 1:

Closing Account Receivable = opening AR + total sale – cash received

So, Total sale = closing AR – opening AR + cash received = 2,250 – 2,500 +21,250 =21,000

Step 2:

Total sale = cash sale + credit sale

Credit sale = total sale – cash sale

Credit sales = $21,000 – $1,250= $19,750

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