If bad debts are calculated at the rate of 1/20% of annual credit sales; what was the credit sales for the period?

A provision for bad debt account had N33,800 at the beginning of the year and N4,220 at the close of the year. If bad debts are calculated at the rate of 1/20% of annual credit sales, what was the credit sales for the period?

A. N210,000
B. N844,400
C. N840,000
D. N500,000

Correct Answer:

Option B – N844,400

Explanation

1/20 * 844400 = 4220