You are given the following information:
| Receivables at 1 January 20X5 | $2,500 |
| Receivables at 31 December 20X5 | $2,250 |
| Total receipts during 20X5 (including cash sales of $1,250) | $21,250 |
What is the figure for sales on credit during 20X5?
Answer
Step 1:
Closing Account Receivable = opening AR + total sale – cash received
So, Total sale = closing AR – opening AR + cash received = 2,250 – 2,500 +21,250 =21,000
Step 2:
Total sale = cash sale + credit sale
Credit sale = total sale – cash sale
Credit sales = $21,000 – $1,250= $19,750