Examkin

Question

Difficulty: MediumCalculation of Total Sales and Total Purchases

Chidi Trading Co. maintains incomplete accounting records. For the financial year ended 31 December 2025, the following information was extracted:

- Debtors balance (1 January 2025): ₦42,000
- Debtors balance (31 December 2025): ₦58,000
- Cheques received from debtors: ₦210,000
- Discount allowed to credit customers: ₦6,000
- Returns inwards from debtors: ₦4,000
- Bad debts written off during the year: ₦3,000
- Cash sales banked: ₦145,000
- Cash sales retained by the proprietor for personal use before banking: ₦15,000

What is the total sales figure for Chidi Trading Co. for the year ended 31 December 2025?

  1. ₦399,000Answer
  2. B
    ₦384,000
  3. C
    ₦373,000
  4. D
    ₦239,000

Answer

₦399,000
The correct answer of ₦399,000 is obtained by adding total cash sales (₦145,000 banked + ₦15,000 drawings = ₦160,000) to credit sales derived from the Debtors Control Account (₦58,000 + ₦210,000 + ₦6,000 + ₦4,000 + ₦3,000 - ₦42,000 = ₦239,000).

Step-by-Step Solution

1
Calculate Total Cash Sales
Total Cash Sales = ₦145,000 (banked) + ₦15,000 (drawings from sales) = ₦160,000
Cash sales taken by the proprietor prior to banking must be included in total cash receipts from sales under the business entity principle.
2
Reconstruct Total Debtors Account to derive Credit Sales
Credit Sales = Closing Debtors + Cheques Received + Discount Allowed + Returns Inwards + Bad Debts - Opening Debtors = ₦58,000 + ₦210,000 + ₦6,000 + ₦4,000 + ₦3,000 - ₦42,000 = ₦239,000
In incomplete records, credit sales are found by crediting the debtors account with payments, discounts, returns, bad debts, and closing balance, then deducting opening debtors.
3
Calculate Total Sales
Total Sales = Cash Sales + Credit Sales = ₦160,000 + ₦239,000 = ₦399,000
Total sales comprises both cash sales and credit sales generated during the accounting period.

Key Concept

Reconstruction of Debtors Control Account and Cash Sales for Total Sales Determination
Rate this question

Topics

Calculation of Total Sales and Total Purchases

More questions from this topic