Credit Management Calculation Help
Options
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
 18.9K For AAT students
 269 NEW! Qualifications 2022
 148 General Qualifications 2022 discussion
 9 AAT Level 2 Certificate in Accounting
 44 AAT Level 3 Diploma in Accounting
 65 AAT Level 4 Diploma in Professional Accounting
 8.9K For accounting professionals
 23 coronavirus (Covid19)
 274 VAT
 92 Software
 275 Tax
 138 Bookkeeping
 7.3K General accounting discussion
 195 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 352 Feedback for AAT
 2.8K Chat and offtopic discussion
 590 Job postings
 17 Who can benefit from AAT?
 36 Where can AAT take me?
 44 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 65 AAT membership