Suppose a corporation sells 5,000 units of a product each year at a price per unit of $380. All sales are on credit with terms of 1/10, net 30. The discount is taken by 35 percent of the customers. What is the amount of the company’s accounts receivable?
Next, in reaction to sales by its main competitor, the company is considering a change in its credit policy to terms of 3/10, net 30 to preserve its market share. How will this change in policy affect accounts receivable?