Refer to Exercise 8-6. Rick thinks that it may be time to refuse to accept checks and to start accepting credit cards. He is negotiating with VISA/MasterCard and American Express, and he would start the new policy on April 1. Rick estimates that with the drop in sales from the “no checks” policy and the increase in sales from the acceptance of credit cards, the net increase in sales will be 20 percent. The credit cards do involve added costs as follows:

VISA/MasterCard: Rick will accumulate these credit card receipts throughout the month and submit them in one bundle for payment on the last day of the month. The money will be credited to his account by the fifth day of the following month. A fee of 3.5 percent is charged by the credit card company.

American Express: Rick will accumulate these receipts throughout the month and mail them to American Express for payment on the last day of the month. American Express will credit his account by the sixth day of the following month. A fee of 5.5 percent is charged by American Express.

Rick estimates the following breakdown of revenues among the various payment methods.

Required:
Prepare a schedule of cash receipts for May and June that incorporates the changes in policy.

Transcribed Image Text:

Cash VISA/Mastercard American Express 5% 75 20