Terry's Place Is Currently Experiencing a Bad Debt Ratio of 4

question 13

Multiple Choice

Terry's Place is currently experiencing a bad debt ratio of 4%. Terry is convinced that, with looser credit controls, this ratio will increase to 8%; however, she expects sales to increase by 10% as a result. The cost of goods sold is 80% of the selling price. Per $100 of current sales, what is Terry's expected profit under the proposed credit standards?

• A) $26.0
• B) $15.4
• C) $13.2
• D) $25.6

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