During the financial year a trader collected payments totalling £3,655,000 from customers. At the end of the year the trader was owed £365,500 by

During the financial year a trader collected payments totalling £3,655,000 from customers. At the end of the year the trader was owed £365,500 by customers. At the start of the year the trader was owed £456,900 by customers. What were the trader's sales for the year?

Expert Solution

The given question can either be solved by preparing a ledger account or it can be solved by using the following method:

At the beginning of the year, the customer owed £456,900 to the trader. He collected £3,655,000 during the year and still was owed £365,500 by the customers at the end of the year.

This implies the following:

Beginning receivable:£456,900

Reduced by the collection made of £3,655,000

And increase in receivable at the year end by £365,500

So, (£3,655,000-£456,900)+£365,500

= £3,198,100+£365,500

= £3,563,600

£3,563,600 is the total sales of the trader during the year.

Junaid answered 2 years ago

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