Edrich Company is engaged in small export business.

The Company maintains

limitedrecords. Most of the company’s transaction are summarized in a cash journal;
non-cash

transactions are recorded by making memo entries. The following are abstracted from
thecompany’s records;

Accounts receivable 370,000 increase

Notes receivable 200,000 decrease

Accounts payable 150,000 decrease

Notes payable-trade 200,000 increase

Notes payable-bank 300,000 increase

m
er as
Sales returns (P50,000 was refunded) 80,000

co
eH w
Sales discounts 20,000

o.
rs e
Purchase returns (P30,000 was refunded) 80,000
ou urc
Purchase discounts 35,000
o

Accounts written-off 60,0000

aC s
v i y re

Recovery of accounts written-off 18,000

Cash sales 300,000

ed d

Cash purchases 250,000

ar stu

Cash receive from account customers 1,500,000

sh is

Cash payment to trade creditors 1,20,000

Th

Question :

What is the amount of gross sales?

a) 1,780,000

b) 2,062,000

c) 2,080,000

d) 2,130,000

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 STEP 1

“Since the computed answer does not match with multiple choices, we will solve the
question for you with the step-by-step gross sales computation. If you want any specific
changes to be solved then please recheck the question.”

Both sales receipts are added together before discounts, refunds, and allowances to determine
gross sales. They are usually only relevant to businesses that work in the consumer retail
sector.

STEP 2

None of the above is the answer.

m
Particulars Amount

er as
Accounts receivable 370,000

co
eH w
Add:
Sales returns 80,000

o.
Sales discounts
rs e 20,000
ou urc
Accounts written-off 600,000
Less:
Recovery of accounts written off 18,000
o

1,052,000
aC s

Add:
v i y re

Cash sales 300,000

Cash received from account customers 1,500,000
TOTAL GROSS SALES 2,852,000
ed d
ar stu

“OR”

= Cash received from account customers + Cash Sales – Sales Discounts

sh is

= 1,500,000 +300,000 -20,000

Th

=1,780,000 (option A) – Not the proper computation, answer computed as per the options.

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