help please - Cash Management

sgafo

Can someone help me please answer question 2.1 (A)
About revised sales values and the revised timing of sales receipts
From AAT practice CBT 2









answers from the AAT website is

Richard

The revised sales value is obtained by multiplying the revised volume by £20. So for example, using period 1 - 4,656 x £20 = £93,120.

The question states that 5% is expected to be bad debts, therefore £4,656 will never be received. This leaves a balance of £88,464 to be collected. This will be received in 3 stages - 25% in period 2 (£88,464 x 25% = £22,116), 50% in period 3 (£88,464 x 50% = 44,232) and 25% in period 4 (£22,116).

Bear in mind that in period 3 you will be receiving the 50% of period 1 sales and 25% of period 2 sales. Then in period 4, you will have 25% of period 3, 50% of period 2 and 25% of period 1.

Hope this helps!