If answers are hand written please make sure, it can be read easily.

Power Play Inc. has seen profits drop acutely because of the economic downturn. To enhance profitability and to preserve cash, Power Play is considering shortening its credit period and eliminating its cash discount. Terms are currently 3/10, net 60 and would be changed to net 30. Currently, 60 percent of customers, on average pay at the end of the credit period (60 days); the other 40 percent pay, on average, in 10 days and receive the discount. It is anticipated that under the new policy customers will pay, on average, in 30 days. At present, average monthly sales are $450,000, but they are expected to fall to $400,000 with the tightening of credit. Variable production costs are 78 percent, and bank financing is currently floating at 11 percent. Bad debt losses at 2 percent of sales are expected to drop to 1.75 percent of sales. a. Should Power Play's credit policy be tightened? Yes No b. What is the average accounts receivable balance under both policies? (Use 365 days in a year. Round the final answers to nearest whole dollar.) Present policy New policy c. Not available in connect. Marla Maple Sugar Company sells to the 12 accounts listed below. Receivable Average Age of the Account Account Balance Outstanding over the Last Year $60,000 28 B 120,000 43 70, eee 10 D 2e,eee 52 E Se, ece 42 F 22e,eee 34 G 30,000 16 H 300,000 65 1 40,000 33 90,000 se 210,000 60,eee 35 Trump Financial Corporation will lend 90 percent against account balances that have averaged 30 days or less 80 percent for account balances between 31 and 40 days; and 70 percent for account balances between 41 and 45 days. Customers that take over 45 days to pay their bills are not considered as adequate accounts for a loan. The current prime rate is 10 percent, and Trump Financial Corporation charges 5 percent over prime to Marla Maple Sugar Company as its annual loan rate. a. Determine the maximum loan for which Marla Maple Sugar Company could qualify. Maximum loan amount b. Determine how much one month's interest expense would be on the loan balance determined in part a Interest expense