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Good Day Sir Moffat,
Can you please help me with the following question:
P is a sole proprietor whose accounting records are incomplete. All the sales are cash sales and 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 the toll and withdrew $2000 per month as drawings. The cash in the till at the beginning and end of the year was $300 and $400 respectively.
What were P’s sales for the year?
And if possible, please do show the T-account used in the solution.
Thank you in advance, God Bless! 🙂
Why are you attempting questions for which you do not have the answer? You should be using a Revision Kit published by one of the ACCA approved publishers – they have answers and workings for all the questions!
This forum is not to simply provide you with answers to test questions, it is to give help on anything you do not understand from our free lectures, or any part of the printed answers that you do not understand.The cash going into the till must have been 50,000 + 12,000 + (12 x 2000) + (400 – 300) = 86100. Of this, 5,000 was the sale of a car, and the remaining $81,100 must be the cash sales.
I cannot type a t-account here, and anyway you will not be asked for t-accounts in the exam and to prepare one would be wasting too much time in the exam 🙂
This question actually came from an Exam kit which I have, It includes answers as well. In the T account made in the book, It debited the proceeds of the car when they sold it, why is that sir? In the question, It is stated that “during the year $50000 was banked, including the $5000 from the sale of a business car”.
Should the proceeds be credited instead along with the banking?
Again, you should try and avoid doing t-accounts in the exam because of the time it takes.
However, since the proceeds are included in the 50,000 you do not credit it again separately. 50,000 is the total paid into the bank and includes the 5,000.
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