Ripley%20Shirt%20Co

Ripley%20Shirt%20Co - but cash sales to remain unchanged If...

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10 Point Exercise, Due 11-1-11. See pp. 417-418 and apply reading to the following. Ripley Shirt Co. sells on credit and manages its own receivables. Average experience for the past year has been as follows: Cash Credit Total Sales $300,000 $300,000 $600,000 COGS 165,000 165,000 330,000 Uncollect. Exp. -- 10,000 10,000 Other Expenses 84,000 84,000 168,000 John Ripley, the owner, is considering whether to accept bankcards (VISA, MasterCard). Ripley expects total sales to increase by 10%
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Unformatted text preview: but cash sales to remain unchanged. If Ripley switches to bankcards, the business can save $8,000 on other expenses, but VISA and MasterCard charge 2% on bankcard sales. Ripley figures that the increase in sales due to the increased volume of bankcard sales would be 10%. Required : Should Ripley Company start selling on bankcards? Show the computations of net income under the present plan and under the bankcard plan....
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This note was uploaded on 11/08/2011 for the course ACC 101 taught by Professor Scottcazzad during the Spring '11 term at Jefferson College.

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