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Please could someone give me the correct answer to this problem:
The turnover in a company was £8 million and its debtors were 20% of turnover. The company wishes to have a provision for doubtful debts of 4% of debtors, which would make the provision 33% higher than the current provision.
To the nearest whole number, what figure would appear in the profit and loss account in respect of doubtful debts?
I calculate 8000000 x 20% = 1600000 X 4% = 64000/1.33 = 48120 X 33% =15880
But this is not right - where am I going wrong?
Thanks
The turnover in a company was £8 million and its debtors were 20% of turnover. The company wishes to have a provision for doubtful debts of 4% of debtors, which would make the provision 33% higher than the current provision.
To the nearest whole number, what figure would appear in the profit and loss account in respect of doubtful debts?
I calculate 8000000 x 20% = 1600000 X 4% = 64000/1.33 = 48120 X 33% =15880
But this is not right - where am I going wrong?
Thanks
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Comments
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Re:Help
Could you give us a clue, and tell us what the answer is?
I assume there is an answer, as you know you've got it wrong!0 -
Re:Help
Hi Try dividing the 64000 by 67% this gives 95,522.39 then to check if this is corret subtract 33% from 95,522.39. I remember doing this in college and i couldn't get my head round it either. You have to divide by 67% as this is the difference between 100% and 33%. please let me know if this is correct.
Hope this helps you
Regards Heather
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