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The CEO of Takween company is considering the impact that certain transactions have on the company's accounts receivable turnover and average collection period. Prior to
The CEO of Takween company is considering the impact that certain transactions have on the company's accounts receivable turnover and average collection period. Prior to the transactions below, Takween's accounts receivable turnover was 6 times, and its average collection period was 61 days. 1. Recorded sales on account $100,000. 2. Collected $25,000 owed by customers. 3. Wrote off a $2,500 account from a customer as uncollectible. (Uses allowance method.) 4. Recorded sales returns of $1,800 and credited the customers accounts. 5. Recorded bad debt expense for the year $7,900, using the allowance method.. Required: Indicate whether each transaction will increase (I), decrease (D), or have no effect (NE) on the ratios, and explain why.
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