Reference no: EM131750812

Question: Prior to a change in credit policy, Slow Soils had lagged behind its competitors. It now has annual sales of $8,800,000. Previous credit terms were net 30; currently, terms of 2/10, net 30 are in use. Forty percent of customers take the discount, and all others pay at the end of the credit period except for bad debts, which increased by 50 percent to 3 percent of total sales. Accounts receivable are financed through a bank loan at 1 2-percent annual interest. As a result of the change in policy, total costs (financing charges, bad debt write-offs, and amounts foregone through cash discounts) increased by $159,146. What was the percentage increase in annual sales following the change in policy?