During the year, Entrop Company made sales on account (credit sales) of $450,000 and cash sales of $275,000 and received deposits of $50,000 for future orders. How much sales revenue should the company report for the year?

Answer 1

To determine the total sales revenue that Entrop Company should report for the year, we need to consider only the sales that are recognized in the income statement. Sales revenue typically includes both cash sales and credit sales but does not include deposits for future orders because they are not considered earned revenue until the goods are delivered or the service is performed.

Here's how it breaks down:

• Credit Sales: $450,000
• Cash Sales: $275,000

The deposits of $50,000 for future orders are not included in the sales revenue since they have not yet been earned.

Total Sales Revenue = Credit Sales + Cash Sales

Calculating that gives:

Total Sales Revenue = $450,000 + $275,000
Total Sales Revenue = $725,000

Therefore, the sales revenue that Entrop Company should report for the year is $725,000.