MJ Limited sold $1,750,000 worth of goods during the current year.The cost of goods sold is $1,050,000.Credit sales were $1,575,000, of which 40% were still outstanding.How much cash was collected by MJ Ltd.?

Question

Quizplus · Accepted Answer

Cash sales = Total sales - Credit sales
Cash sales = $1,750,000 - $1,575,000 = $175,000

Amount of credit sales outstanding = 40% of $1,575,000 = $630,000

Total cash collected = Cash sales + Collections on credit sales
Total cash collected = $175,000 + ($1,575,000 - $630,000) = $1,120,000

MJ Limited Sold $1,750,000 Worth of Goods During the Current