Question: Wonder Dog Leash Company is examining their accounts receivable patterns

Wonder Dog Leash Company is examining their accounts receivable patterns. Wonder’s customers are offered terms of 1/10 net 30. Of their receivables, $150,000 are current, $75,000 are one-month overdue, $30,000 are two-months overdue, and $20,000 are over two-months overdue.
a. What proportion of Wonder’s customers pay their bills on time?
b. What is the effective cost of Wonder’s terms of trade credit?
c. What might happen to their receivables balance if they changed their terms to 1/15 net 30? To 2/10 net 30?

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  • CreatedMarch 27, 2015
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