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Answer (A) is correct . Price can calculate expected discounts taken under the new credit policy as follows: ? Total sales $24,000,000 Times:? percentage on credit ¡Á?????????90% Credit sales $21,600,000 Times:? subject to discount ¡Á?????????50% Sales subject to discount $10,800,000 Times:? discount percentage ¡Á???????????2% Expected discounts taken $????216,000<
Answer (B) is incorrect because Only 90% of the sales are on credit; $240,000 would be correct only if a cash discount were allowed on cash sales as well as credit sales.
Answer (C) is incorrect because This figure is the discount on all credit sales.
Answer (D) is incorrect because This figure is based on the assumption that all sales will be discounted.