Question 2 Emilio and Ren Santos own Skysong, Inc.. From its inception, Skysong, Inc. has sold merchandise on either a cash or credit basis, but no credit cards have been accepted. During the past several months, the Santas have begun to question their credit-sales policies. First, they have lost some sales because af their refusal to accept credit cards. Second, representatives of two metropolitan banks have convinced them to accept their national credit cards. One bank, Business National Bank, has stated that (1) its credit card fee is 4% and (2) it pays the retailer 96 cents on each $1 of sales within 3 days of receiving the credit card billings. The Santos decide that they should determine the cost of carrying their own credit sales. From the accounting records of the past 3 years, they accumulate these data: 2017 2016 2015 $544,000 $642,000 $399,000 1,580 4,070 Net credit sales 2,930 4,070 2,840 4,070 Collection agency fees for slow-paying customers Salary of part-time accounts receivable clerk Credit and collection expenses as a percentage of net credit sales are as follows: uncollectible accounts 1.7%, billing and mailing costs 0.5%, and credit investigation fee on new customers 0.2% Emilio and Ren also determine that the average accounts receivable balance outstanding during the year is 5% of net credit sales. The Santos estimate that they could earn an average of 10% annually on cash invested in other business opportunities. Answer the following Prepare a tabulation or each year showing total credit and collection expenses in dollars and as a percentage of net credit sales Round percentage ans er sto deci a piace, e 9-1.2% 2017 2016 2015 Net credit sales 642,000 399,000 $544,000 Credit and collection expenses Collection agency fees Salary of accounts receivable clerk Uncollectible accounts Bing and mailing costs Credit investigation fees $2,930 2,840 4,070 4,070 4,070 Total Total expenses as a percentage of net credit sales Determine the net credit and collection expenses in dollars and as a percentage of sales after considering the revenue not earned from other investment opportunities. Note: The income lost on the cash held by the bank for 3 days is considered to be immaterial.) (Round percentages to 1 decimal place, eg. 15.2%.) 2017 2016 2015 Net credit and collection expense Net expenses as a percentage of net sales Click if you would like to Show Work for this question: Open Show Work