Chapter 8, Problem 8.1DC

To determine

Decision Case

Case Summary: Company W sells on account and manages its receivables. A, the controller considers to stop selling on account and starts accepting the debit and credit cards from the customers. By this way the sales will be increased by 10%, and at the same time the cost of goods sold would also be increased by 10%, while saving on $5,000 per year in other operating expenses.

To Decide: Whether A should start receiving credit cards and debit cards and to present the net income under the new plan.