[animalwithin]

The following information pertains to Spee Co.’s 20X1 sales:

Cash sales
Gross $40,000
Returns and allowances $2,000

Credit sales
Gross $60,000
Discounts $3,000

On January 1, 20X1, customers owed Spee $20,000. On December 31, 20X1, customers owed Spee $15,000. Spee uses the direct write-off method for bad debts. No bad debts were recorded in 20X1. Under the cash basis of accounting, what amount of revenue should Spee report for 20X1?

The answer to this included the credit sales, WHY IF THEY’RE ASKING FOR REVENUE UNDER CASH BASIS??

[Globetrotter]

Animalwithin,
I think that they are not asking for cash sales. They are asking for sales under cash basis. You will have to add actual sales for cash and payments received for credit sales. That is why they are giving you beginning and ending A/R.

[Author]

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