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CASH BUDGET

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › CASH BUDGET

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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    Posts
  • November 7, 2018 at 10:20 am #484095
    aamir12
    Member
    • Topics: 18
    • Replies: 13
    • ☆

    QUESTION :

    zahra’s budget sales for the following months are :
    $
    AUGUST 2017 110000
    SEPTEMBER 2017 120000
    OCTOBER 2017 100000
    NOVEMBER 2017 140000
    DECEMBER 2017 180000

    40% of her customers pay in cash at the time of sale and receive a trade discount of 2%
    30% of her customers pay one month after the sale and receive a cash discount of 1%
    30% of her customers pay two months after the sale and do not receive any discount.

    SIR IAM CONFUSED BETWEEN TRADE DISCOUNT AND CASH DISCOUNT .
    CAN U EXPLAIN THIS QUESTION

    November 7, 2018 at 3:44 pm #484125
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You have not said what the question wants.

    The distinction between trade discount and cash discount is irrelevant here – the customer simply pays less than the amount.

    For Augusts sales, the cash will be received as follows:
    In August: 40% x 110,000 = 44,000 less 2% = 43,120
    In September: 30% x 110,000 = 33,000 less 1% = 32,670
    In October: 30% x 110,000 = 33,000

    It is a similar pattern for each of the following months.

    Have you watched my free lectures on budgeting? The lectures are a complete free course and cover everything needed to be able to pass the exam well.

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