Faith company provided the following information relating to...

Faith = Company - provided the following information relating to current operations: Accounts receivable, January $4,000,000 Accounts receivable collected $8,400,000 Cash sales $2,000,000 Inventory; January $4,800,000 Inventory December 31 $4,400,000 Purchases $8,000,000 Gross margin on sales $4,200,000 What is the balance of accounts receivable on December 31?

Transcript

00:01 Hello, in this video we're going to compute for the ending balance of our accounts receivable and we have the following given figures and as for me i usually prefer doing t accounts or using t accounts and solving problems because for me it's more convenient and more understandable but it's all up to you how you solve the problem so let us compute the ending balance of our accounts receivable let's start with the ar or your accounts receivable account so this is your accounts receivable and on the debit side we put our beginning balance of 4 million and the accounts receivable collected that's a credit to your accounts receivable so you put here a million 400 ,000 and we will go with the cashes sales later you cannot put your cash sales in here because that's a cash sale and when you record a cash sale that's a debit to cash of course and credit to your sales so there's no ar account involved but we are very particular when recording sales in your accounts receivable it should be credit sales so in this case we're going to look for the credit sales later so let us skip that one for a while and your inventory on january 1 is 4 ,800 ,000 so let us put that here in the second t account we have an inventory of 4 ,800 ,000 as your beginning balance again it's a debit because the normal balance of inventory is debit you have an ending inventory of 4 million 400 ,000 so let us presume here that 400 ,000 and you have a gross i'm sorry you have a purchases of 8 million so in inventory you debit your inventory when you purchase purchase something so that's 8 million so let us compute then for your cost of goods sold so when you add your beginning balance your purchases that will total to your total goods available for sale so that's 4 million 800 000 plus 8 million you have a 12 .8 million good of a total goods available for sale less your ending inventory a 4 ,400 ,000 so that you can get your cost of goods sold in the amount of 8 ,400 ,000.

03:28 So this is now your cost of goods sold.

03:33 So you have a gross margin on sales, a cost of goods sold, and you have your cash sales.

03:42 So maybe by then we can compute now our credit sales.

03:49 How much is our credit sales? how much is our credit sales.

03:55 Okay.

03:57 And okay for a while...

Question

Please give Ace some feedback