A firm that sells exclusively on credit allows a discount of 2% to its customers if they pay by the due date, which they always do.
The following details’ are available for the firm’s most recent financial year:
- Amount owed by debtors at the beginning of the year £22,000
- Amount owed by debtors at the end of the year £24,000
- Bad debts written off during the year £3,500
- Money received from debtors during the year £147,000
The firm‘s credit sales for the year were?
Select ONE answer:
- £148,469
- £152,500
- £155,500
- £155,612
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct
- Not correct
Answer 3:
Because 2% discount on £147,000 = 98% debt owed received. Therefore discount = £3,000
DebtorsDr Balance b/d £22,000
Dr Bad Debt Recovered £0
Dr Sales (Credit) £155,500
Dr Totals £177,500
Cr Bank £147,000
Cr Bank (Bad Debt Recovered) £0
Cr Discount Allowed £3,000
Cr Bad Debts £3,500
Cr Balance c/d £24,000
Cr Totals £177,500
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