Question
Patriots Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of customers pay on the 10th day and
Patriots Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of customers pay on the 10th day and take discounts, while the other 60% pay (on average) 40 days after their purchases. a. What is the days sales outstanding? b. What is the average amount of receivables? c. What is the percentage cost of trade credit to customers who take the discount? d. What is the percentage cost of trade credit to customers who do not take the discount and pay in 40 days? e. What would happen to Patriots accounts receivable if it toughened up on its collection policy with the result that all non-discount customers paid on the 30th day?
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