Final accounts prep

hashiz

Hi i am struggling on aq2016 question bank paper task 2. I have done a) and b) but i dont get part c) can anyone help?? The question is long to type up but i can do if it helps, cheers

hashiz

Sole trader :
-Not registed for vat
-Gross sales margin 25%
-Op inv 5050
-Sales = 64900
-Purchases = 48390

in part b i calculated cost of goods sold as 48675 and cl inv as 4725 which is correct

part c) is what im struggling with it says "The trader has a policy of allowing customers to settle their accounts one month after this sale is made"

Which of the following is most likely to be the total on the sales ledger at the end of the financial year"
a)6940
b)16225
c)64900

the answer is a) but how can it be if sales is already mentioned as 64900? Unless its talking about individual sales ledger accounts in which case its not clear in the question??

Mike Webster

Therefore, at the end of the year only one month's invoices would be outstanding. If sales for the year are £64,900, how can the entire year's invoices be outstanding - try dividing £64,900 by 12 months (to give you the outstanding balance at year end) - this gives you £5,408.33 - the nearest figure quoted in the task is £6,490 so must be the answer. £16,225 would be 3 months' invoices.