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chapter 5 ex2-change of policy

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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March 14, 2017 at 8:36 am #378125
kitse
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with a 1% settlement disc, why not mean that avg receivables are
$20m(0.99*18/54 + 36/54)=$2 949 041 seeing that those that pay within the 30 day mark reduce the absolute trade receivables figure?
PS: please indulge me my perhaps stupid questions.
March 14, 2017 at 1:36 pm #378153
John Moffat
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That is fine.
As I do say in the lecture, the examiner accepts it with or without the discount (he sometimes subtracts the discount in his answers, and sometimes he doesn’t, but either gets full marks).
The effect on the final answer is always going to be very small.
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