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Hello Tutor,I have one question relating to the practice question from BPP kits
“Co is considering offering an early settlement discount of 1% for payment in 30days.It expected that 25% of its customers( representing 35 % of the annual credit sales figure) will pay in 30days in order to obtain the discount
Why the question using 35% rather than using 25% to calculate the average receivable days?Thank you.
Because it is 35% of the sales that are taking the discount!!
It is irrelevant how many customers that involves – all that matter is how much they are owing.