The president, vice president, and sales manager of Moorer Corporation were discussing the company's present credit policy. The sales manager suggested that potential sales were being lost to competitors because of Moorer Corporation's tight restrictions on granting credit to consumers. He stated that if credit policies were loosened, the current year's estimated credit sales of $\$ 3,000,000$ could be increased by at least 20 percent next year with an increase in uncollectible accounts receivable of only $\$ 10,000$ over this year's amount of $\$ 37,500$. He argued that because the company's cost of sales is only 25 percent of revenues, the company would certainly come out ahead.

The vice president, however, believed that a better alternative to easier credit terms would be to accept consumer credit cards such as VISA or MasterCard. He believed this alternative could increase sales by 40 percent. The credit card finance charges to Moorer Corporation would be 4 percent of the additional sales.

At this point, the president interrupted by saying that he wasn't at all sure that increasing credit sales of any kind was a good thing. In fact, he suggested that the $\$ 37,500$ of uncollectible accounts receivable was altogether too high. He wondered whether or not the company should discontinue offering sales on account.

With the information given, determine whether Moorer Corporation would be better off under the sales manager's proposal or the vice president's proposal. Also, address the president's suggestion that credit sales of all types be abolished.