A sole trader with incomplete records has these figures: opening trade receivables £5,000; closing trade receivables £7,200; cash received from customers £61,800. All sales are on credit and there were no irrecoverable debts. What were credit sales for the year?
Answer and explanation
Correct answer: D. £64,000
- Step 1: Draw up the receivables control account: opening balance + sales − cash received = closing balance.
- Step 2: £5,000 + sales − £61,800 = £7,200.
- Step 3: Sales = £7,200 + £61,800 − £5,000 = £64,000.
Answer
£64,000.
Why not the others: £59,600: This reverses the effect of the change in receivables. £61,800: This takes cash received as sales and ignores the movement in receivables. £74,000: This adds opening receivables instead of deducting them.
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