Question

The following information pertains to Cenon Company for 200B:

Accounts receivable, January 1, 200B	8,000
Accounts receivable, December 31, 200B	9,600
Net Cash Sales	3,200
Accounts Receivable turnover for 200B	5 times

 

The company's net sales for 200B was

a. 47,200

b. 88,000

c. 51,200

d. 48,000

Answer 1

The company's net sales for 200B were 47,200.

Step 1: Compute for the Average Inventory.

Average inventory = (Beginning Inventory + Ending inventory)/2

                             = (8,000 + 9,600)/2

                             = 8,800

Step 2: Compute for the net Credit Sales using the Accounts Receivable Turnover.

Accounts Receivable Turnover = Net Credit Sales/Average Inventory

                                    5           =    Net Credit Sales/8,800

                      Net Credit Sales = 5 x 8,800

                      Net Credit Sales = 44,000

Step 3: Compute for the total net sales.

Net Credit sales	44,000
Add: Net cash sales	3,200
Total net sales	47,200

 

The company's net sales for 200B were 47,200.