Logan Distributing
Autor: pceusa • July 22, 2012 • Essay • 255 Words (2 Pages) • 2,007 Views
a) Compute the accounts receivables balance before and after the change in the cash discount policy. Use the net sales (total sales minus cash discounts) to determine the average daily sales.
Before After
Policy 1/10, net 30 3/10, net 50
Sales $400,000 $600,000
Customers taking discount 30% 50%
Sales on credit $280,000 $300,000
Cash sales $120,000 $300,000
Discount $1,200 $9,000
Net sales on cash $118,800 $291,000
Total net sales $398,800 $591,000
Average daily sales on cash basis $325.48 $797.26 365 day year
Average daily credit sales $767.12 $821.92 365 day year
Total Average daily sales $1,092.60 $1,619.18
If the customers take their discount by paying before the 10th and the others pay on the 30th and 50th day
Receivables for customers availing discount =10*325.48 $3,255 $7,973 =10*797.26
Receivables for customers not availing discount =30*767.12 $23,014 $41,096 =50*821.92
Total receivables $26,269 $49,069
Increase in receivables= $22,800
b) Determine EOQ before and after the change in the cash discount policy. Translate this into average inventory (in units and dollars) before and after the change in the cash discount policy.
Before After
# of units 15000 22500
Ordering cost $200.00 $200.00
Carrying cost $1.50 $1.50
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