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Good morning Sir,
Could you help me on the following:
P is a sole proprietor, what is the value of P’s sales revenue for the year?Considering that 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 till and withdrew $2,000 per month as drawings.
The cash in the till at the beginning and end of the year was $300 and $400 respectively?What I did not understand is:
1) Is it relevant at all the fact that $5,000 are from the sale of a business car?
2) Why should I put the PAID $12,000 wages in cash from the till and the BANKED $50,000 on the same side of my “T-account” to calculate the revenue?Thank you for your help.
1. Yes it is relevant – we do not include the money from the sale of a car in the sales revenue. (I explain how we deal with the sale of a non-current asset in my free lectures).
2. The entry for paying wages in cash is credit cash and debit wages.
The entry for paying cash of 12,000 into the bank is credit cash and debit bank.Have you watched my free lectures? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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