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Aiste is a sole trader. She has the following financial information available for the year ended 31 March 20X6:
$
Trade receivables as at 1 April 20X5 145,637
Cash sales 86,970
Returns from trade credit customers 12,620
Discounts received 12,680
Irrecoverable debts 13,965
Cash from credit customers 138,680
Trade receivables as at 31 March 20X6 152,563
What amount should be included for sales in Aiste’s financial statements for the year ended 31 March 20X6? You should assume that sales returns are recorded in a separate account. $_____Answer.
The correct answer is 259,161.
The correct answer is 259,161.
$
Trade receivables closing balance 152,563
Returns from customers 12,620
Irrecoverable debt 13,965
Cash from credit customers 138,680
Less
Trade receivables opening balance (145,637)
Credit sales 172,191
Plus
Cash sales 86,970
Total sales 259,161Why the net sales figure (259161-12620) is not included but the gross sales figure of 259161. Aren’t we supposed to use the net sales figure (sales-sales returns) in the financial statement?
It is the net sales that appear in the SOFP. However because they are recording the sales returns in a separate account they will show both figures in the SOPL i.e. sales less sales returns. It is however a slightly unfair question.
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