Qs) a company has a two month receivable cycles . It receives in cash 45% of the total gross sales value in the month of invoicing. Irrecoverable Debts are 20% of total gross sales value and there is a 10% discount for setting accounts within 30 days .
What proportion of the first months sales will be received as cash in the second month . ?
A) 25%
B) 30%
C) 35%
D)55%
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Hi Syeda,
I hope you are well?
Not 100% sure but I think it is :
C) - 25%
Based on the information provided - 45% was paid in month 1 that leaves you with 55% to still pay
However you have been told that 20% is Irrecoverable Debt, this then means that 35% still left to pay
Then it says those who pay in within 30 days will receive a 10% discount, that means that 10% will pay in month one. So 35% - 10% = 25%.
Do let me know if that is correct, if not I do apologise.
Many thanks
Shamil
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