FINANCE-Essence of Skunk Fragrances, Ltd., sells 6,800 units

QUESTION

Essence of Skunk Fragrances, Ltd., sells 6,800 units of its perfume collection each year at a price per unit of $398. All sales are on credit with terms of 1/25, net 50. The discount is taken by 40 percent of the customers. (Enter your answer as directed, but do not round intermediate calculations.)Requirement 1:What is the amount of the company’s accounts receivable? (Round your answer to 2 decimal places (e.g., 32.16).) Average receivables$ Requirement 2:In reaction to sales by its main competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 3/25, net 50 to preserve its market share. Will this change in policy increase or decrease accounts receivable?

ANSWER:

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