Final accounts prep
hashiz
Registered Posts: 2
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
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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??
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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.Michael JH Webster AATQB FMAAT0