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- March 5, 2018 at 2:39 pm #440348
Hi, I have a doubt in the following question
Alpha is a sole trader who does not keep proper accounting records.
Alpha’s first year of trading was 20X4. From reviewing Alpha’s bank statements and the incomplete records relating to cash maintained, the following summary has been compiled.Bank and cash summary, Alpha, 20X4
Cash received from credit customers and paid into the bank 381,600
Expenses paid out of cash received from credit customers before banking 6,800
Cash sales 112,900Other information, Alpha, 20X4
Irrecoverable debts written off 7,200
Closing balance of Trade receivables 0Which of the following correctly represents Alpha’s sales figure for 20X4?
A $508,500
B $112,900
C $381,600
D $494,100Answer given in BPP text is as follows
Sales = 381,600 + 6,800 + 112,900 + 7,200 = $508,500 (A)But what I have done is added 112900(cash sales) with 381600(cash received) and 7200(irrecoverable debts) giving $501,700. (which is not there as an option in ANSWERS)
I don’t know the reason why they have added 6,800 as this is the expense paid by the Alpha Co from cash received by customers?
Thanks in advance
March 5, 2018 at 4:05 pm #440379The BPP answer is correct.
They paid 381,600 into the bank. However they had paid some expenses before they put the money in the bank.
So the total cash they received must have been 381,600 + 6,800. (They spent 6,800 of it and were left with 381,600 to pay into the bank.)March 5, 2018 at 7:30 pm #440452Oh, Ok Sir.
Actually, I missed out the point “before banking”.
Thank you so much Sir for your quick reply.
March 5, 2018 at 7:45 pm #440460You are welcome 🙂
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