How to Calculate the Day's Revenue in Accounts Receivable
A company that makes a sale on credit must record the amount of the sale in the accounts receivable account. This means the company expects to be paid at a later date, but the goods and services are provided in the present. A company can calculate the day’s revenue in terms of credit sales by viewing the accounts receivable account. However, the total revenue for the day cannot be determined by viewing accounts receivable alone because a company may receive cash in exchange for providing goods and services. Cash payments are not included in the accounts receivable ledger.
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Instructions
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Confirm the selling price of each unit sold on credit. The price of the good sold is used to determine the amount of revenue earned for the day. A company that sells multiple items on credit must verify the selling price of each unit. Let’s assume a company sells three products, product A, B and C. The selling price of product A is $4, the price of product B is $7 and the price of product C is $10.
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Verify the number of units sold on credit for the day. Let’s say a company’s credit sales for the day are 20 units of product A, 30 units of product B and five units of product C for the day.
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Multiply the number of units sold on credit for the day by the selling price. For example, a company that sells 20 units of product A on credit at $4 per unit generates $80 in credit sales as it relates to product A. In this scenario, product B generates $210 for the day and product C generates $50.
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Add the amount of credit sales generated by each product for the day. This result indicates the day’s revenue as far as accounts receivable is concerned. For example, a company that generates credit sales of $80 for product A, $210 for product B and $50 for product C has total credit sales of $340 for the day. In this case, the company debits accounts receivable for $340 and credits sales revenue for $340.
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