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MikeLittle.
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Muslim Farooque
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I had a question regarding credit sales, my tutor gave me an example that a Mr.c made a transaction of £50,000 with Mr.A which Mr.A will pay back after 2 years,
The goods are delivered and dispatched , the tutor said in the current year he will record £40,000(net present value cost of capital 10%) and record remaining amount £10,000 as £5000 for next two year as interest income, now my question is that is this correct? And if it is correct then is that £5000 like a deferred income?Regards
MikeLittle
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41,322 recognise as revenue at date of sale
Next year, recognise 4,132 finance income (Dr Receivable, Cr Finance Income). Receivable now stands at 45,454
Year 2, recognise a further 4,545 (Dr Receivable, Cr Finance Income) Receivable now stands at 50,000 and will (hopefully) be received in cash
Ok?
Muslim Farooque
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Thanks Sir Mike!
MikeLittle
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You’re welcome
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