Urgent, Need clarification.

Chanaat

Hello All,

I am studying level 3 without a training provider. Got this question in an assessment task, I could not figure out how the value has been arrived. I thought if I post in this section, someone could explain as to how to workout calculations. I am self studying, so can't take tutor's help. I have exams in few days, I am in need of immediate help.


Below is a final accounts preparation exam question. This carries 2 marks.


Revenue 356460
Opening inventory 81201
Purchases 213699
Closing inventory 45378
Cost of sales 249522
Gross profit 106938

The trader has decided to introduce credit terms and allow customers to settle their account up to 30 days after purchase. What is the most likely figure outstanding on the trade receivables account at the year end?

The answer in the book is 128210.



For future reference, Is there any section in AAT, where we could post out doubts and get clarifications from tutors.

Many Thanks
Chan

Pian32

Hi Chan

I don't think there is that function at the moment. You could try posting in the correct section for your module though as others may have recently come across the same problem.

As for your question it feels like we're missing information.

Expected receivables = Revenue/(length of accounts) * length of payment

I'm guessing the amount of time the accounts are done over isn't a year? The other option would be a mistyped figure or more information on other elements in the question.

You should also make clear that it's a practice question as discussion of actual assessments isn't allowed and on first reading 'Got this question in an assessment task' a moderator might assume the details are from a live assessment.

Chanaat

Thanks for replying Pian32. This question is from an assessment task in the text book that I am studying. I think the answer refers to the gross profit. Yesterday, I checked another question and answer and concluded this. In this question, VAT has to be added to the gross profit to arrive at the answer. This is a closer value from the choices provided. In another question, the trader was not vat-registered and the answer showed the gross profit. That is how I concluded.
Thank you once again for taking your time to reply to my post.
Chan