Cash Management AAT Assessment 1 Q:5

toluwanimianita

I really need help as I've spent too long on this question.
The settlement discount will reduce total profit by £153,340 which is equivalent to 5.5% of total sales.
How is the figure £153,340 worked out??

Please help

N4T

Total settlement discount given for each of the 6 periods (27060+28380+29150+24750+23100+20900) = 153,340
Total sales = 2,788,000 therefore 153,340 / 2,788,000 x 100% = 5.5%

toluwanimianita

Thank you

Martih123

I am having trouble working out how these figures are calculated. Anybody help? Thanks in advance

Smiller94

Martih123 said:

I am having trouble working out how these figures are calculated. Anybody help? Thanks in advance

Hi Martih,

If you are wondering how N4T calculated the figures for the 6 periods, this is done as follows:
P1: (492,000 x 0.55) x 10% = 27,060
P2: (516,000 x 0.55) x 10% = 28,380

this is continued for all six periods...
Once you add all six periods of settlement discount, this gives you your 153,340 to answer task 5b)
You then present this as a % of the total sales.

Really hope this helps, it took me a while also.

Martih123

Thank you Smiller94