Credit Management Calculation Help
rebecca2
Registered Posts: 49 Regular contributor ⭐
Hi everyone, could anybody give me a pointer on how to calculate the answer to question 1.3 (b) on the second practise assessment on MyAAT?
'Small companies are eligible to charge interest to customers who settle their debts late. The interest rate is calculated as 8% above base rate and is charged on the gross amount of the debt due (VAT inclusive at 20%)'
(b) What is the interest chargeable on a net debt of £3000 which is 60 days late when the base rate is 1%?
The correct answer is £53.26.
The gross amount would be £3600 but I am unsure which calculation I would need to use to achieve the answer?
Thanks all x
'Small companies are eligible to charge interest to customers who settle their debts late. The interest rate is calculated as 8% above base rate and is charged on the gross amount of the debt due (VAT inclusive at 20%)'
(b) What is the interest chargeable on a net debt of £3000 which is 60 days late when the base rate is 1%?
The correct answer is £53.26.
The gross amount would be £3600 but I am unsure which calculation I would need to use to achieve the answer?
Thanks all x
0
Comments
-
Hi Rebecca
So the interest rate is 8+1 = 9% for the year.
The interest is applicable to the gross amount;
So your gross amount x the percent for the year...
3600 x 9% = 324
So you must then divide by 365 and multiply by how many days they are overdue, which in this case is 60.
324 x 60/365 = 53.26
Hope this helps x0 -
Hi Louise,
Thank you so much! It was the dividing by 365 which I was missing! Massive help for me, thank you :001_smile:x0 -
Hi Louise,
Thank you so much! It was the dividing by 365 which I was missing! Massive help for me, thank you :001_smile:x0 -
Glad I could be of help! Try and think of it all as days as most of the calcs in CRMC are multiplied by 365. It was still fresh in my mind from class yesterday0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership