XYZ Inc. sells on terms of 2/10, net 30. Total sales for the year are...
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| XYZ Inc. sells on terms of 2/10, net 30. Total sales for the year are $1,000,000. Consider 30 percent of the customers take discounts and pay on the 10th day, while the other 70 percent pay, on average, 45 days after their purchases. | ||||||
| 1. What is the days' sale outstanding? | ||||||
| 2. Determine the average amount of receivables. | ||||||
| 3. For the customers who take the discount, what is the percentage cost of trade credit? | ||||||
| 4. For the customers who do not take the discount and pay in 45 days, what is the percentage cost of trade credit? | ||||||
| 5. What would happen to XYZ's account receivable if it created a new collection policy that required all non-discount customers to pay on the 30th day? |
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