Collegiate Tuxedo Rents Apparel Throughout the Year

question 29

Multiple Choice

Collegiate Tuxedo rents apparel throughout the year.They have experienced non-payment by about 15% of their customers with an average loss of £200.Collegiate wants to stem their losses by
Using an instant electronic credit check on the customer.These checks will cost them £7 on each of
The 1,000 customers.The opportunity cost is 1.5% for the credit period.Should they pursue the
Credit check?

• A)No, because the £7000 cost is too high.
• B)No, because a £200 loss is minor.
• C)Yes, because the net gain is £30,000.
• D)Yes, because the net gain is £23,000.
• E)Yes, because the net gain is £193,000.

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Definitions:

Office Supplies

Consumable items used in an office setting, such as paper, pens, and office equipment.

Unearned Revenue

Prepayment from customers for goods or services which have not yet been delivered or performed, representing a liability until the obligation is fulfilled.

General Journal

The general journal is an accounting ledger in which all types of transactions are initially recorded, formatted by date, before being transferred to specific accounts in the general ledger.

Landscaping Services

Professional services that encompass the planning, designing, and maintenance of outdoor and garden spaces.