The Foglers are concerned about the firm's current credit policy. The terms of sale are net 30 , but they expect only 55% of the customers (by dollar value) to pay the full amount on day 30 , while the other 45% pay, on average, on Day 50 . Gross sales are currently $350,000 per year. Of the gross sales, 2% end up as bad debt losses. Monthly sales for the first six months of 2023 are provided in the table below. FRS is considering a change in credit policy. The change would entail 1) changing the credit terms to 2/10, net 30,2 ) employing stricter credit standards before granting credit, and 3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to the pay the full amount within 30 days. The owners believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm - after all, the discount amounts to a price reduction. The net expected result is for sales to increase to $375,000, for 35% of the paying customers to take the discount and pay on the 10th day, for 45% to pay the full amount on day 30 , for 15% to pay late on day 35 , and for bad debt losses to fall from 2% to 1.5% of gross sales. The firm's operating (variable) cost ratio will remain unchanged at 65%, and its cost for financing (notes payable or required return on investments) will remain unchanged at 5%. The company would have to purchase some new inventory to cover the additional sales. Inventory turnover averages 4 times per year, and CGS is 55% of sales. The most recent income statement with relevant information is given below. \begin{tabular}{|l|r|} \hline \multicolumn{2}{|c|}{ Table 2 - 2023 Income Statement } \\ \hline Gross Sales & $350,000 \\ \hline Less: discounts & 0 \\ \hline Net Sales & $350,000 \\ \hline Variable Costs (65\%) & 227,500 \\ \hline Profit before credit costs and taxes & $122,500 \\ (CM) & \\ \hline Credit related costs: & \\ \hline A/R Carrying costs & \\ \hline Inventory Investment cost & \\ \hline Bad Debt Losses & \\ \hline Profit before taxes & \\ \hline Taxes (26\%) & \\ \hline Net Income & \\ \hline \end{tabular} 3. Refer to the monthly sales in Table 1 on the previous page and the current customer payment patterns to answer the following questions. a. What were FRS's receivables balances at the end of Quarters 1 and 2 for 2023? b. Assume 90 days per calendar quarter. What were the average daily sales (ADS) and days sales outstanding (DSO) for the each of the first two quarters of 2023? What were the ADS and DSO for the first six months of 2023? c. Does the DSO indicate that the firm's customers have changed their payment behavior from the first quarter to the second quarter of 2023 ? Is DSO a good management tool in this situation? Why or why not? d. Would the aging schedule or uncollected balances schedule properly measure customer payment patterns? Based on your answer, construct the schedule that measures payment patterns and explain to the Foglers what the schedule indicates about their customers' payment patterns from one quarter to the next