Average daily sales = 360,000/360 =$ 1000
Accounts receivable balance = 45 days 8 1000 = $ 45000
Taking into account assumptions,
New A/R balance = 1000* 10 =$ 10,000
Funds freed = 45000-10000 = $ 35000
Savings on loan = 12% x $35,000=$ 4,200
Discount on sales = 5% x $360,000= (18000)
Net change in income from discount = 4200 – 18000 = $(13,800)
Dome Metals has credit sales of $360,000 yearly with credit terms of net 45 days, which...
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