Question

Q1. Choose a Saudi corporation and find its statement of financial position for 2019 and the related notes. Discuss and analyze the statement in light of things you studied in chapter 5. Answer should be no less than 300 words.

Q2. Discuss the different methods to account for cash discount. Support you answer with examples.

Answer 1

1) For Question NO:01 . Question is incomplete.

2) Cash Discount

Examples:

1. Mr Satish offered an invoice of Rs. 5,000 /- dated 22 June November 2019 with terms [ 3/10, n/40]. He paid the whole amount on 30 June 2019. How much did Mr Satish actually paid for the invoice?

• Date of Invoice: 22^nd June 2019
• Day 1 of the cash discount period. : 23^rd June 2019
• Last day of the Cash discount period: 30^{th June} 2019
• Date of payment: 30^th June 2019

Cash discount. = Price x Discount rate

                                                               = Rs. 5,000 x 3/100

= Rs. 150

Amount effectively paid by Mr Rahul. = Bill value (- ) Cash discount

= Rs. 5,000 (- ) Rs. 150

                                                                = Rs. 4850 /-

Example :2

Mr Karhik issued an invoice on 20th July 2019 for Rs. 4000/-. with terms of 3/10. He was paid the amoaunt on 30th July 2019. How much did Mr Karthik paid fo rth einvoice.

• Date of Invoice: 20^{th July} 2019
• Day 1 of the cash discount period. : 21st July 2019
• Last day of the Cash discount period: 31^st July 2019
• Date of payment: 30^th November 2019

Cash discount. = Price x Discount rate

                                                               = Rs. 4,000 x 2/100

= Rs. 80

Amount effectively paid by Mr Rahul. = Bill value (- ) Cash discount

= Rs. 4,000 (- ) Rs. 80

                                                                = Rs. 3,920 /-