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Hi my dear Tutor, i have similar question relating to the previous one.
An extract from a company’s sales budget is as follows.
October——–224000$
November–390000$
December–40200010% of sales are paid for immediately in cash.of the credit customers, 30% pay in the month following the sale and are entitled to a 1% discount.The remaining customers pay two months after the sale is made.
what is the value of sales receipts shown in the company’s cash budget for December?
Cash sales in December (402000*10%)—40200
Receipts from November credit sales($390000*90%*30%*99%)-104247
receipts from october credit sales ($224000*90%*70%)—141120—The remaining customers pay two months after the sale is made.–still not understandingtotal sales receipts in december—–285567
Receipts from November credit sales($390000*90%*30%*99%)-104247——.of the credit customers, 30% pay in the month following the sale and are entitled to a 1% discount
in the month following the sale meaning after October ?
Really need explanation(((
For Octobers sales:
10% pay immediately – so they pay in October.
30% of the remaining 90% pay in the month following and get a 1% discount – so they pay in November.
The remaining 70% of the 90% pay two months after – so they pay in December. ****For November sales:
10% pay immediately – so they pay in November.
30% of the remaining 90% pay in the month following and get a 1% discount – so they pay in December. ****
The remaining 70% of the 90% pay two months after – so they pay in January.For Decembers sales:
10% pay immediately – so they pay in December. ****
30% of the remaining 90% pay in the month following and get a 1% discount – so they pay in January.
The remaining 70% of the 90% pay two months after – so they pay in February.So the total cash received in December is the total of the three amounts that I have put **** against. (There is obviously no need to waste time calculating the other amounts)
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I can’t understand why multiplying 224000*90%*70% it should be 224000*90%*69% because there is 1% discount , can you explain that please ?
Thank youOctobers sales only get a discount for those paying 1 month after – i.e. those paying in November.
Those who pay in December will not get the 1% discount.Look again at what I typed before.
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In October sales the customer pay 10% in cash that mean the credit is 90% then they paid 30% and get 1% discount that mean the total payments is 10% cash , 30% in November 1% discount that mean the customer paid 41% of the debt the rest is 69% not 70% is that right?
No – it is not right!
What is right is as I have typed it above.
If the invoice is $100. Then they pay $10 immediately.
Of the remaining $90, 70% is paid one month later (which is $63), and 30% is paid two months later (which is $27).They will get a 1% discount off the $63 because it was paid one month later, but that does not affect the other two amounts. (The total received will obviously be a bit less than $100 because they are giving some of the people a discount).
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Could you please explain how to deal with receivables and payables in cash budget in cause of there is discount for early payments.
thank you
? really get tired of understanding f2 paper’s this part.
My Tutor,please juat embed lecture video relating to this part if possible.Ahmed69: You follow the instructions in the question – read the illustration above.
Kengara: I have already told you that I will, but that it will not be for some weeks. And that in the meantime you can find a lecture in the F9 section (because for cash budgets the syllabus is the same.
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