Paul is a sole proprietor whose accounting records are incomplete. All the sales are cash sales. During the year 50,000 $ was banked, including $ 5,000 from the sale of a business car. He paid $ 12,000 wages in cash from till and withdrew $ 2,000 as drawings. The cash in till at beginning of the year was $ 300 and at the end was $ 400. No payments were made.
Find sales value for the year.
This question is so strange. It is solved as:
Let 'y' be sales figure
$ 2,000 (drawings) + $ 12,000 (wages) + $ 50,000 (banked) + year end cash in till balance $ 400 = $ 64, 400
$ 64,400 = x + $ 300 opening balance + $ 5000 (sales proceeds from business car)
Sales figure = x = $ 59, 100.
My question is that
a) is there a different way to solve this so it would make more sense to me
b) $ 5000 from sales process of business car is capital income and hence not part of sales revenue. Is this correct?
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Calculation for sales figure
3y ago#1Best is to prepare a quick little t-account for cash in till and the cash received from sales will be the balancing figure. I cannot write up a t-account here, but the following amounts were paid out of the till:
Cash to bank 50,000; cash for wages 12,000; cash for drawings 2,000. So the total going out of the till was 64,000.
The cash balance in the till increased by 100 over the year, so the total received into the till must have been 64,100 (64,000 to cover the payments out of the till and 100 to increase the balance).
5,000 of the 64,100 was received from the sale of the car, and so the sales revenue is the remaining 59,100.
Thank you very much!
3y ago#3You are welcome :-)
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