Question

NO hand written work

The following is data from Sapir's financial reports for Dec 31st 2015: Accounts Receivable, Net - $300,000 Allowance for Doubtful Account- $30,000 On Dec 31st 2014 Gross AR is $150,000. During 2015 the company collected $100,000 out of 2014's Accounts Receivable and recognizes write off of $40,000. The company's sales are 20% in cash and the rest in credit. What is the amount of sales written in the company's income statement for 2015?

Answer 1

Answer:

Sales written in the company's income statement for 2015= $400,000

Explanation

Let's deal with the data of 2014 at first.

Gross Accounts Receivable on 31st Dec 2014 = $150,000

Of which, $40,000 written off.

:. Net Accounts Receivable on 31st Dec 2014 = $150,000 - $40,000 = $110,000

Of which $100,000 were collected on 2015.

Balance of 2014 to be collected in 2015 =$110,000 - $100,000 = $10,000.

Let's come to sales of 2015:

Accounts Receivable, Net = $300,000

Allowance for Doubtful Debts = $30,000

Accounts Receivable Gross = $300,000 + $30,000 = $330,000

To get the credit sales of 2015, we have to reduce the portion of Accounts Receivable if 2014.

i.e., Credit Sales of 2015 = $330,000 - $10,000 = $320,000

Cash sales = 20% = 320,000 * (20/80) = $80,000

Total Sales of 2015 = Cash sales + Credit sales

= $320,000 + $80,000

= $400,000