McEwan Industries sells on terms of 3/10, net 30. Total salesfor the year are $1,921,000; 40% of the customers pay on the 10th day and take discounts,while the other 60% pay, on average, 70 days after their purchases.a. What is the days sales outstanding?b. What is the average amount of receivables?c. What is the percentage cost of trade credit to customers who take the discount?d. What is the percentage cost of trade credit to customers who do not take the discountand pay in 70 days?e. What would happen to McEwan’s accounts receivable if it toughened up on its collectionpolicy with the result that all nondiscount customers paid on the 30th day?
McEwan Industries sells on terms of 3/10, net 30. Total sales
for the year are $1,921,000; 40% of the customers pay on the 10th day and take discounts,
while the other 60% pay, on average, 70 days after their purchases.
a. What is the days sales outstanding?
b. What is the average amount of receivables?
c. What is the percentage cost of trade credit to customers who take the discount?
d. What is the percentage cost of trade credit to customers who do not take the discount
and pay in 70 days?
e. What would happen to McEwan’s
policy with the result that all nondiscount customers paid on the 30th day?
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d. What is the percentage cost of trade credit to customers who do not take the discount
and pay in 70 days?
e. What would happen to McEwan’s
policy with the result that all nondiscount customers paid on the 30th day?
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