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i am confused in the question velm company its from june 2003 attempt i am able to know about the current recievables which are taken from the balance sheet $550 but i dont know how the have taken out revised recievables what i was doing is 26days multiplied by $4m sales/365 which i got is $284932 but at the back of the kit its ($4000000-26667)*26/365 =$283000 can u please help me out with it..
It is because in the answer they have subtracted the discount from the sales because the cash that will actually be received will be less (due to the discount).
It is debatable whether or not we should subtract the discount – sometimes the examiner has done and sometimes he hasn’t. However he gives full marks either way – even though the final answer is slightly different (and in his answers to more recent questions he has not subtracted the discount – he has done what you have done).
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