Day: April 4, 2020

Over the course of an accounting period a business’s debtors increased by £40,000.

If 80% of the business’s total sales of £750,000 were made on credit, no discount was allowed to debtors and no bad debts were written off, the amount of money received from debtors during the period was?

Select ONE answer:

1. £560,000
2. £640,000
3. £710,000
4. £790,000

 

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Let opening debtors = 0. Therefore closing debtors = £40,000. Assume Bank Balance c/d 0 thus Sales (Credit) (£750k * 80%) = £600,000 – Therefore Cr Bank £560,000 Cr Debtors Balance b/d £40,000 = Total £600,000
2. Not correct
3. Not correct
4. Not correct

 

 

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