To determine the total sales on account, we need to analyze the relationship between accounts receivable, collections from customers, and sales. Let's break this down step-by-step.
Step 1: Understand the Components
- Beginning Accounts Receivable (A/R): This is the amount owed to the company at the start of the period. In this case, it is N8,000.
- Ending Accounts Receivable (A/R): This is the amount owed to the company at the end of the period. Here, it is N15,000.
- Collections from Customers: This is the cash received from customers during the period, which is N36,000.
- Total Sales on Account: This is what we are trying to find out.
Step 2: Use the Accounts Receivable Formula
The relationship between these components can be expressed with the following formula:
[
\text{Ending A/R} = \text{Beginning A/R} + \text{Sales on Account} - \text{Collections}
]
Step 3: Rearranging the Formula
To find the total sales on account, we can rearrange the formula:
[
\text{Sales on Account} = \text{Ending A/R} - \text{Beginning A/R} + \text{Collections}
]
Step 4: Plugging in the Values
Now, we can substitute the values we have into the rearranged formula:
- Ending A/R = N15,000
- Beginning A/R = N8,000
- Collections = N36,000
Substituting these values into the formula gives us:
[
\text{Sales on Account} = N15,000 - N8,000 + N36,000
]
Step 5: Performing the Calculation
Now, let's perform the calculation step-by-step:
-
Calculate the change in accounts receivable:
[
N15,000 - N8,000 = N7,000
]
-
Add the collections:
[
N7,000 + N36,000 = N43,000
]
Conclusion
Thus, the total sales on account during the period is
N43,000. Therefore, the correct answer is
D. N43,000.
Explanation of Other Options
- A. N23,000: This option is incorrect because it does not account for the increase in accounts receivable and the collections made.
- B. N29,000: This option is also incorrect as it underestimates the total sales by not properly considering the increase in accounts receivable.
- C. N36,000: This option only reflects the collections made and ignores the change in accounts receivable, which is crucial for calculating total sales.
Revision Summary
- Understand the relationship between beginning and ending accounts receivable, collections, and sales.
- Use the formula: Ending A/R = Beginning A/R + Sales on Account - Collections.
- Rearrange the formula to find Sales on Account: Sales on Account = Ending A/R - Beginning A/R + Collections.
- Perform calculations carefully to avoid common pitfalls, such as neglecting changes in accounts receivable.