Question

For the month of May 2020, 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, 2020 $105,000 Accounts receivable, May 31, 2020 $92,000 Accounts receivable written off as uncollectible $2,000 What are the gross sales for May 2020

Answer 1

Answer and Explanation:

$61,000 = 40000+32000-13000+2000

Find the difference between the beginning and ending accounts receivable.

$105,000 - $92,000 = $13,000

Subtract this from the cash received on accounts receivable to find the amount of credit sales.

$32,000 -$13,000 = $19,000

Add this to the cash sales.

$19,000 + $40,000 = $59,000

Adjust for the direct write offs.

$59,000 + $2,000 = $61,000

Answer 2

Answer:

$61000

Explanation:

Gross sales refers to the total number of sale transactions that occurred in a given period. From the given data,

Difference between ending (may 31) and beginning (may 1) account receivables

= 105000 - 92000

= $13,000

Next, cash received on accounts receivable is subtracted from $13,000 to find the amount of credit sales.

Thus,

32,000 - 13,000 = $19,000

This is added to the cash sales of 40,000

Thus,

19,000 + 40,000 = $59,000

Adjust for the direct write offs

Therefore

Sales + Uncollectible = gross sales

59000 + 2000

= $61000