Martha's Classic the past 3 years he 9 Store has extended credit to customers on open account. Its average experience for each of has been as follows: B (Click the icon to view the data.) Martha Carter is considering whether to accept bank cards (for example, VISA or MasterCard). She has resisted because she does not want to bear the cost of the service, which would be 4% of gross sales. The representative of VISA daims that the availability of bank cards would have increased overall sales by at least 10%. Regardless of the level of sales, the new mix of the sales would be 40% bank card and 80% cash. Requirements 1. How would a bank card sale of $1,100 affect the accounting equation? Where would the discount appear on the income statement? 2. Should Carter adopt the bank card if sales do not increase? Base your answer solely on the sparse facts given here 3. Repeat requirement 2, but assume that total sales would increase 10%. Requirement 1. How would a bank card sale of S1,100 affect the accounting equation? Where would the discount appear on the income statement? (Use parentheses or a minus sign to show a decrease in an accounting equation component and leave any unused cells blank.) Liabilities Assets Cash = Accounts payable + Stockholders' Equity Sales + Cash discount + Where would the discount appear on the income statement? In strict theory, the $ discount should appear Requirement 2. Should Carter adopt the bank card if sales do not increase? Base your answer solely on the sparse facts given here. Start by calculating the net effect on the sales if sales do not increase. (Leave unused cells blank.) Cash Bank Card Total Gross sales Deduct: Cash discount Net effect The credit costs are $ vir the company uses the new sales mix. If sales do not increase, profit will seriously when deciding whether the entity should accept bank cards. This example shows that diverting regular cash sales to bank card sales is ain) a manager must ponder Requirement 3. Repeat requirement 2, but assume that total sales would increase 10%. Start by calculating the net effect on the sales if sales increase by 10%. (Leave unused cells blank.) Cash Bank Card Total Gross sales Deduct: Cash discount Net effect Based on the limited information, a manager The credit costs are $ if the company uses the new sales mix with a sales increase of 10%. The new net cash receipts is $, and without the credit card, net cash receipts were $ accept bank cards if the incremental cost-of-goods sold of gross sales are less than the difference. Data table Cash Credit Total Sales $ 600,000 $ 200,000 $ 800,000 Bad debt expense 7,000 7,000 14,000 Administrative expense 14,000 Print Done Martha's Classic the past 3 years he 9 Store has extended credit to customers on open account. Its average experience for each of has been as follows: B (Click the icon to view the data.) Martha Carter is considering whether to accept bank cards (for example, VISA or MasterCard). She has resisted because she does not want to bear the cost of the service, which would be 4% of gross sales. The representative of VISA daims that the availability of bank cards would have increased overall sales by at least 10%. Regardless of the level of sales, the new mix of the sales would be 40% bank card and 80% cash. Requirements 1. How would a bank card sale of $1,100 affect the accounting equation? Where would the discount appear on the income statement? 2. Should Carter adopt the bank card if sales do not increase? Base your answer solely on the sparse facts given here 3. Repeat requirement 2, but assume that total sales would increase 10%. Requirement 1. How would a bank card sale of S1,100 affect the accounting equation? Where would the discount appear on the income statement? (Use parentheses or a minus sign to show a decrease in an accounting equation component and leave any unused cells blank.) Liabilities Assets Cash = Accounts payable + Stockholders' Equity Sales + Cash discount + Where would the discount appear on the income statement? In strict theory, the $ discount should appear Requirement 2. Should Carter adopt the bank card if sales do not increase? Base your answer solely on the sparse facts given here. Start by calculating the net effect on the sales if sales do not increase. (Leave unused cells blank.) Cash Bank Card Total Gross sales Deduct: Cash discount Net effect The credit costs are $ vir the company uses the new sales mix. If sales do not increase, profit will seriously when deciding whether the entity should accept bank cards. This example shows that diverting regular cash sales to bank card sales is ain) a manager must ponder Requirement 3. Repeat requirement 2, but assume that total sales would increase 10%. Start by calculating the net effect on the sales if sales increase by 10%. (Leave unused cells blank.) Cash Bank Card Total Gross sales Deduct: Cash discount Net effect Based on the limited information, a manager The credit costs are $ if the company uses the new sales mix with a sales increase of 10%. The new net cash receipts is $, and without the credit card, net cash receipts were $ accept bank cards if the incremental cost-of-goods sold of gross sales are less than the difference. Data table Cash Credit Total Sales $ 600,000 $ 200,000 $ 800,000 Bad debt expense 7,000 7,000 14,000 Administrative expense 14,000 Print Done