Question

Question 45
A company sold 20% of the goods on cash basis and the balance on credit basis. Debtors are allowed 1.5
month's credit and their balance as on 31.03.2015 is 1,25,000. Assume that the sale is uniform throughout
the year. Calculate the credit sales and total sales of the company for the year ended 31.03.2015.​

Answer 1

Explanation:

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Answer 2

Given:

A company sold 20% of the goods on a cash basis and the balance on a credit basis. Debtors are allowed 1.5  month's credit and their balance as of 31.03.2015 are 1,25,000. Assume that the sale is uniform throughout  the year.

To Find:

Calculate the credit sales and total sales of the company for the year ended 31.03.2015.​

Solution:

First, we shall compute total debtors for the year 2017-18,

$Debtors=\frac{closing debtors}{debtors velocity} *12$

Now the value will be by putting the values,

$debtors=\frac{125000}{1.5}*12\\=1000000$

(closing debtors as of 31st March 2018 of Rs125000 represents sales of last 1.5 months, so by applying unitary method we can find total debtors for the year 2017-18)

Amount of total debtors=Total amount of credit sales of 2017-18

It is given in the question that the company sells 20% goods on a cash basis and the remaining that is 80% on a credit basis, this means that 1000000 represents 80% of total sales

Computation of total sales,

total sales*80%=1000000

Total sales=1250000

Hence, the credit sales and total sales of the company are 1000000 and 1250000 respectively.