To increase sales, management is considering reducing its credit standards. This action is expected to increase sales

Question:

To increase sales, management is considering reducing its credit standards. This action is expected to increase sales by $125,000. Unfortunately, it is anticipated that 7 percent of the sales will be uncollectible. turnover is expected to be six times a year, and it costs the firm 10 percent to carry its receivables. Collection costs will be
4 percent of sales, and the cost of the additional goods sold is $64,000.
Will earnings increase?
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...