Acca financial Accounting (FA) Study Text ac ca (FA)

Test your understanding 3 

 

George owes a supplier, Herbie, $2,000 and is owed $3,400 by a 

customer, Iris. George offers a cash discount to his customers of 2.5% 

if they pay within 14 days and Herbie has offered George a cash 

discount of 3% for payment within ten days. 

George took advantage of the early settlement discount offered and 

paid Herbie within ten days. Iris was expected to take advantage of the 

early settlement discount offered to her, and therefore the sales invoice 

raised by George was prepared on that basis. However, Iris did not pay 

within 14 days and paid the full amount due after 30 days. 

(a)