A provision for bad debt account had N3,800 at the beginning of the year and N4,220 at the close of the year. If bad debts are calculated at the rate of 1/2% of annual sales, what was the credit sales for the period?

daomigreat

4 months ago

The answer is 84000
Bad debts = Provision of bad debts at the end - Provision of bad debts at the beginning.
Bad debts = 4220 - 3800 = 420
Note the increase in provision for bad debts is seen as the bad debts for the period
The next step is to relate the bad debts to the credit sales
= 0.5% * S = 420
0.5/100 * S = 420
The third step is to solve for the credit sales
S = 420/0.005 = 84,000

Dboy1111

5 years ago

How pls

daomigreat

4 months ago

Please my school correct this

B1c3k5

9 months ago

please explain