A provision for bad debt account had N3,800 at the beginning of the year and N4,220 at the close of the year. If bad debts are calculated at the rate of 1/2% of annual sales, what was the credit sales for the period?

  • A N2,100,000
  • B N844,400
  • C N840,000
  • D N500,000
jamb 1999accounting

The correct answer is B. N844,400

The provision for bad debts increased by N4,220 - N3,800 = N420 during the year. If this represents 1/2% of annual sales, we can calculate the total sales as follows:

N420 / (1/2 / 100) = N840,000

So, the credit sales for the period were N840,000.

Previous question Next question