For the month of December, the records of Balin Corporation show the following information:

The corporation uses the direct write-off method in accounting for uncollectible accounts receivable. What are the gross sales for the month of December?

Question

For the month of December, the records of Balin Corporation show the following information:

The corporation uses the direct write-off method in accounting for uncollectible accounts receivable. What are the gross sales for the month of December?

Quizplus · Accepted Answer

To determine the gross sales for the month, we need to add the total sales for the month to the accounts receivable at the beginning of the month and then subtract the accounts receivable at the end of the month.

Beginning Accounts Receivable: $14,000 
Credit Sales: $120,000 
Accounts Receivable at the End of the Month: $10,000

$14,000 + $120,000 - $10,000 = $124,000 
However, the problem specifically asks for gross sales, so we need to subtract the amount of sales that were never paid:

Gross Sales = Credit Sales - Uncollectible Accounts 
Uncollectible Accounts = $4,000 
Gross Sales = $120,000 - $4,000 = $116,000

Therefore, the answer is B) $120,000.

For the Month of December, the Records of Balin Corporation