Change of Credit Policy_Practice.docx

Change of Credit Policy_Practice.docx - What do the...

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What do the following trade credit terms mean? 1. 1/20, net 50 2. 2/30, net 60 3. net 30 4. 2/10, 1/230, net 60 AAA is considering to change its credit policy in an attempt to increase its sales. Currently, it sells on credit terms of “net 30”. The suggested credit term is ‘1/30, net 60”. It is expected that with the new credit term, 50 percent of the customers will take the discount. The following changes are also expected under the new policy. Current Policy New Policy Annual credit sales RM4,500,000 RM5,000,000 Bad debt losses Original sales level RM115,000 New sales level 6% of new sales Average collection period
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  • Fall '13
  • Economics, 30 days, 50 percent, 15 percent, Net 30, 70 percent

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