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exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year) *

exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year) *

FINANCIAL ACCOUNTING
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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Bulldogs Inc. has sales of P3,000,000. Its credit period and average collection period are both 30 days and 1% of its sales end up as bad debts. The general manager intends to extend the credit period to 45 days which will increase sales by P300,000. However, bad debts losses on the incremental sales would be 3%. Costs of products and related expenses amount to 40% exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year) * O P177,750 O P161,250 O P106,000 O P171,000
Transcribed Image Text:Bulldogs Inc. has sales of P3,000,000. Its credit period and average collection period are both 30 days and 1% of its sales end up as bad debts. The general manager intends to extend the credit period to 45 days which will increase sales by P300,000. However, bad debts losses on the incremental sales would be 3%. Costs of products and related expenses amount to 40% exclusive of the cost of carrying receivables of 15% and bad debts expenses. The change in the credit policy would result to increase (decrease) in incremental profit of (Use 360 days a year) * O P177,750 O P161,250 O P106,000 O P171,000
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