Why was this deducted and not added

[Syndy]

Hello,

In the answer of the attached qqueation the debtors of year 2004 were deducted not added , why?

Im thinking that they should be added because they are included in the finnancial year.

Thank you for your help

 

[Fidget]

The question is asking you to calculate the credit sales in the year 1 April 2004 to 31 March 2005.

The Debtor balance given at the 1 April 2004 is the opening balance of credit sales already outstanding, which means that those sales took place *before* 1 April 2004.

So, to arrive at the figure for credit sales that actually happened between 1 April 2004 and 31 March 2005, you have to deduct the opening balance because that figure relates to credit sales made before 1 April 2004.

 

[Stan Ejims]

Hello,

In the answer of the attached qqueation the debtors of year 2004 were deducted not added , why?

Im thinking that they should be added because they are included in the finnancial year.

Thank you for your help

Here is another alternative solution to the question (I know the attached file might be crude but I hope it helps)
Recall that the only item that can increase debtors balance is credit sales and the only item that can also reduce it is cash/cheque from customers .
Therefore ,debtors ledger account can be opened in order to ascertain the credit sales .As shown in the file,debit the account with opening balance of debtors in 2004 ;3,140 while you creditor with cash deposit from customers ;15,270 and the closing balance of debtors in 2004 (which becomes the opening balance in 2005).Then your balancing figure on the debit side which was asterisked in the file ( derived by deducting the opening balance from the summation of cash and closing balance i.e 19,350(15,270 + 4,080) - 3,140 = 16,210 ) is your credit sales .
Though this is a long shot but it's just for clarity.

 

[Syndy]

The question is asking you to calculate the credit sales in the year 1 April 2004 to 31 March 2005.

The Debtor balance given at the 1 April 2004 is the opening balance of credit sales already outstanding, which means that those sales took place *before* 1 April 2004.

So, to arrive at the figure for credit sales that actually happened between 1 April 2004 and 31 March 2005, you have to deduct the opening balance because that figure relates to credit sales made before 1 April 2004.

I understand . Thank you very much.

 

[Syndy]

Here is another alternative solution to the question (I know the attached file might be crude but I hope it helps)
Recall that the only item that can increase debtors balance is credit sales and the only item that can also reduce it is cash/cheque from customers .
Therefore ,debtors ledger account can be opened in order to ascertain the credit sales .As shown in the file,debit the account with opening balance of debtors in 2004 ;3,140 while you creditor with cash deposit from customers ;15,270 and the closing balance of debtors in 2004 (which becomes the opening balance in 2005).Then your balancing figure on the debit side which was asterisked in the file ( derived by deducting the opening balance from the summation of cash and closing balance i.e 19,350(15,270 + 4,080) - 3,140 = 16,210 ) is your credit sales .
Though this is a long shot but it's just for clarity.

Very good . Thank you very much.