7. 7.

Size of accounts receivable [LO 20.1] Essence of Skunk Fragrances Ltd sells 7 900 units of its perfume collection each year at a price per unit of $385. All sales are on credit with terms of 1/10, net 40. The discount is taken by 65 per cent of the customers. What is the amount of the company’s accounts receivable? In reaction to sales by its main competitor, Sewage Spray, Essence of Skunk is considering a change in its credit policy to terms of 2/10, net 30 to preserve its market share.

How will this change in policy affect accounts receivable?