For the month of May 2015, Ceres Corporation, which uses the direct write-off method in accounting for uncollectible accounts receivable, has the following information: Cash sales $40,000 Cash received on accounts receivable 32,000 Accounts receivable, May 1, 2015 105,000 Accounts receivable, May 31, 2015 92,000 Accounts receivable written off as uncollectible 2,000 What are the gross sales for May 2015? A : $19,000 B : $61,000 C : $59,000 D : $78,000
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Cash sales
$40,000
Cash received on accounts receivable
32,000
Accounts receivable, May 1, 2015
105,000
Accounts receivable, May 31, 2015
92,000
Accounts receivable written off as uncollectible
2,000
What are the gross sales for May 2015?
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A : $19,000
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B : $61,000
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C : $59,000
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D : $78,000
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