RECEIVABLES INVESTMENT
McDowell Industries sells on terms of 3/10, net 30. Total sales for the year are $912,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 40 days after their purchases.
a. What is the days sales outstanding?
b. What is the average amount of receivables?
c. What is the percentage cost of trade credit to customers who take the discount?