Ripley Shirt Company sells on credit and manages its own receivables. Average experience for the past 3 years has been as follows:

John Ripley, the owner, is considering whether to accept bankcards (VISA, MasterCard). Ripley expects total sales to increase by 10% but cash sales to remain unchanged. If Ripley switches to bankcards, the business can save $8,000 on other expenses, but VISA and MasterCard charge 2% on bankcard sales. Ripley figures that the increase in sales will be due to the increased volume of bankcard sales.
Required
Should Ripley Shirt Company start selling on bankcards? Show the computations of net income under the present plan and under the bankcard plan. (Challenge)

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Cash Credit Total $300,000 $300,000 $600,000 Cost of goods sold.. 165,000 165,000 330,000 10,000 84,000 168,000 Sales.... 10,000 Other expenses 84,000