S8-6 Critical Thinking: Analyzing the Impact of Credit Policies LO 8-10.846 Problem Solved Company has been operating for five years as a software consulting firm During this period, it has experienced rapid growth in Sales Revenue and in Accounts Receivable. To solve its growing receivables problem, the company hired you an itu fint corporate controller. You have put into place more stringent eredit-granting and collection procedures that you expect will reduce receivables by approximately one-third by year-end. You have gathered the following data related to the changes in thousando) Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net (in thousands) Beginning of Year End of Year (projected) 51.000,605 5660.495 36,500 10.225 5963.803 $650.270 Prior Year Current Year (projectad) 57,515.444 $7,015.069 Net Sales (assume all on credit) Required: Page 392 1. Compute, to one decimal place, the accounts receivable turnover ratio based on three different assumptions a. The stringent credit policies reduce Accounts Receivable Net, and decrease Net Sales a projected in the table b. The stringent credit policies reduce Accounts Receivable, Net, un projected in the table but do not decrease Net Sales from the prior year e. The stringent credit policies are not implemented resulting in no change from the beginning of the year Accounts Receivable balance and no change in Net Sales from the prior year 2. On the basis of your findings in requirement I write a brief memo to the chief financial officer explaining the potential . benefits and drawbacks of more stringent credit policies and how they are likely to affect the accounts receivable turnover ratio. For Part 2: What does a stringent credit policy entail. Think of how the work may change for the people who handle accounts receivable. What kind of tasks may they be doing in each scenario? Also consider the changes in the ratio and its components