Calculation of Credit Sales

Opening Balance of Sundry Debtors: 12000

Bills Receivable Accepted by Customer: 13000

Closing Balance of Sundry Debtors: 14000

Cash Received from Debtors during the Year: 38400

To calculate the credit sales during the year, we need to use the following formula:

Credit Sales = (Opening Balance of Sundry Debtors + Bills Receivable Accepted by Customer + Closing Balance of Sundry Debtors) – Cash Received from Debtors during the Year

Let's substitute the given values in the formula:

Credit Sales = (12000 + 13000 + 14000) – 38400

Credit Sales = 39000 – 38400

Credit Sales = 600

Therefore, the credit sales during the year are Rs. 600.

Explanation:

Credit sales refer to the sales made by a business on credit to its customers. It is important for a business to keep track of its credit sales as it is a significant source of revenue. In this question, we are given the opening balance of sundry debtors, bills receivable accepted by the customer, closing balance of sundry debtors, and cash received from debtors during the year. Using these values, we can calculate the credit sales made during the year.

The formula to calculate credit sales is the sum of opening balance of sundry debtors, bills receivable accepted by the customer, and closing balance of sundry debtors, minus the cash received from debtors during the year. By substituting the given values in the formula, we get the credit sales for the year as Rs. 600.

This calculation helps the business in determining its revenue from credit sales and also helps in managing its cash flow.