Reconstructing Credit Sales from Incomplete Records

Steps:

• Use the trade receivables account: opening debtors + credit sales = receipts + discounts allowed + closing debtors.
• Assume opening debtors are zero (common in basic reconstructions without records).
• Rearrange for sales: credit sales = receipts from credit customers + discounts allowed + closing trade receivables.
• Total sales equal credit sales if no cash sales are mentioned.

Why D is correct:

• It follows the accounting formula for credit sales: Sales = Receipts + Closing receivables + Discounts allowed, adding back discounts to reflect full invoiced amount.

Why the others are wrong:

• A subtracts discounts allowed, understating sales by not adding back the waived amount.
• B subtracts closing receivables, ignoring that unpaid sales increase the sales figure.
• C subtracts both closing receivables and discounts, double-counting reductions and understating sales.

Final answer: D