1. avatar says

    I do enjoy your lectures but i am not getting the %s used in Example one chapter 5. even the answers at the back are showing it the same way. For me 40% of 80000 is 32000. Please help me understand this. Thank you.

    • Avatar of John Moffat says

      I assume you mean example 1 in Chapter 6?

      Also, I assume you are talking about the sales of 80,000 in November X1.
      40% of 80,000 is indeed 32,000. However they are the cash sales in November and therefore the cash would be received in November. We are preparing the cash budget for January onwards.

      It is only the credit sales in November where (because they are on credit) the cash will be received 2 months later – i.e. in January.

      So the cash receipts in January are the cash sales in January (40% x 110,000), plus the cash received from the credit sales made 2 months earlier (i.e. in November, so 60% x 80,000)

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