7. Size of Accounts Receivable [LO1] Essence of SkunkFragrances, Ltd., sells 7,900 units of its perfume collectioneach year at a price per unit of $385. All sales are on creditwith terms of 1/10, net 40. The discount is taken by 65percent of the customers. What is the amount of thecompany's accounts receivable? In reaction to sales by itsmain competitor, Sewage Spray, Essence of Skunk isconsidering a change in its credit policy to terms of 2/10, net30 to preserve its market share. How will this change inpolicy affect accounts receivable? AВCEFGHJK1Chapter 202Question 734Input Area:6.7Units sold7.9008Unit price$3859.Terms1% /1010Net4011Discount used %65%12New terms2% /1013New net30141516Output Area:171819Total credit sales20АСР20,5021Receivables turnover22Average receivables2324If the firm increases the cash discount, then morepeople will pay sooner, thus lowering the averagecollection period. If the ACP declines, receivables252627turnover increases, which will lead to a decrease28in average receivables.2930

7. Size of Accounts Receivable [LO1] Essence of Skunk Fragrances, Ltd., sells 7,900 units of its perfume collection each year at a price per unit of $385. All sales are on credit with terms of 1/10, net 40. The discount is taken by 65 percent of the customers. What is the amount of the company's accounts receivable? In reaction to sales by its main competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 2/10, net 30 to preserve its market share. How will this change in policy affect accounts receivable?

7. Size of Accounts Receivable [LO1] Essence of Skunk Fragrances, Ltd., sells 7,900 units of its perfume collection each year at a price per unit of $385. All sales are on credit with terms of 1/10, net 40. The discount is taken by 65 percent of the customers. What is the amount of the company's accounts receivable? In reaction to sales by its main competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 2/10, net 30 to preserve its market share. How will this change in policy affect accounts receivable?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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