General accounting McEwan Industries sells on terms of 3/10, net 35. Total sales for the year are$785,000; 40% of the customers pay on the 10th day and take discounts,while the other 60% pay, on average, 86 days after their purchases. Assume365 days in a year for your calculations.A) What is the days sales outstanding? Round your answer to two decimalplaces.B) What is the average amount of receivables? Round your answer to thenearest cent. Do not round intermediate calculations.C) What is the percentage cost of trade credit to customers who take thediscount? Round your answers to two decimal places.D) What is the percentage cost of trade credit to customers who do not takethe discount and pay in 86 days? Round your answers to two decimal places.Do not round intermediate calculations.

Step 1: Define Credit SalesCredit sales are sales made on credit. Credit sales are the main source…

Answered: McEwan Industries sells on terms of…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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