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Hallo,
in the following example, I have no idea how to come up with the sales for the year, the answer is $81,100 but looks like I don’t understand the example, could you give me some hints.
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 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 were the sales for the year?Thank you!
You might find it helps to prepare two t-accounts – one for cash at bank, and one for petty cash.
If 50,000 was banked, but 5,000 was from selling a car, then the remaining 45,000 came from sales.
However before the 45,000 was paid into the bank, he had taken out 12,000 for wages and 24,000 for drawings, so the cash that had been received must have been 45,000 + 12,000 + 24,000 = 81,000.
Finally, the cash in the till went up by 100 as well, so the total cash sales must have been 81,100 (of which 100 was left to increase the cash balance, 12,000 was paid as wages, 24,000 was taken as drawings and the rest was put into the bank).
Thank you very much, I wouldn’t be able to think of it, though it doesn’t seem hard.
The question says that the drawings are $2,000 a month, and there are 12 months in a year.
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