Tubney Technology - settlement discount
System
Posts: 100,534 🤖 Admin 🤖
Can anyone help?
I am doing the above assignment and have got to the bit where it asks you to check some payments against the discount list to see if the customer has paid the correct amount.
I don't understand the discount list.
I have found a thread on cash discount and it describes it the way I understood it, but on the list mentioned, it does not seem to be worked out the way I understood it and it has really confused me.
:?: :shock:
I am doing the above assignment and have got to the bit where it asks you to check some payments against the discount list to see if the customer has paid the correct amount.
I don't understand the discount list.
I have found a thread on cash discount and it describes it the way I understood it, but on the list mentioned, it does not seem to be worked out the way I understood it and it has really confused me.
:?: :shock:
0
Comments
-
Re:Tubney Technology - settlement discount
I've been playing around with the figures on that list for an hour or so and am thoughroughly confused too. Maybe I'm being thick (which is all too possible), but I just can't see where they get the settlement discount figures from :?
Still, all the question is asking you to do is to check the figures on the list against the statements and remittance notes, make sure they tally and that payments are within the 14 day discount period so I wouldn't worry too much.
Hopefully there's someone out there with a more helpful reply - this is bugging me now.
Chris
0 -
Re:Tubney Technology - settlement discount
what text book is it out of??0 -
Re:Tubney Technology - settlement discount
It's out of the Osborne Workbook Foundation Accounting units 1 to 4.
Chris, I think you are probably right, I just wanted to cement my understanding of how the settlement discount works so tried to work it out from the figures on the list and basically the list just doesn't work out - by my calculation!
I do tackle everything very literally and expect things like this to work out.
Maybe I need to chill a bit?
Anyway if you agree that is something. I have read and reread the bits in the book about how settlement discount is calculated and even done a search on google and I think I have it right but the figs are wrong.
As I understand it, the discount is really on the VAT not the item price. So to me it would make more sense to work out the VAT on the original amount, then find out what 3.5% of the VAT is and deduct from the original VAT figure then add to the original item price.
I have tried this, it works out more or less the same but seems more logical to me.
Or am I totally barking? :?:0 -
Re:Tubney Technology - settlement discount
What confuses me is that at the beginning of the paper it says VAT, trade discount and settlement discount should be rounded down to the nearest penny. So i do this, then i look at the answers and on some of the figures they have been rounded up!0 -
Re:Tubney Technology - settlement discount
Well I am totally barking!
I think I have got it now, but not sure that it was explained fully - not enough for me obviously!0 -
Re:Tubney Technology - settlement discount
If it'd any consolation I'm struggling with it too! And likewise couldn't get my figures to agree with those in the discount sheet! I'm hoping to get feedback on the assigment including an explanation of this issue. I'm sure it will be well too late by then but if I do get to undertand it I'll post it! Good luck!0 -
Re:Tubney Technology - settlement discount
Any trade discount should be applied first.
To work out settlement discount.
Lets say the net amount due after trade discount is £100 and settlement discount is 2%
Net remains the same = £100
Discount calculated on VAT = £100 x 98% x 17.5 % = £17.15
Invoice total £100 + 17.15 VAT = £117.15
Hope this helps
0