The following data are taken from the financial statements of Mercado Decorations:
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2009
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2008
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Accounts receivable (net), end of year
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$ 550,000
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$ 520,000
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Net sales on account
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3,850,000
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3,100,000
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(a) Compute for each year (1) the receivables turnover and (2) the average collection period. At the end of 2007, accounts receivable (net) was $490,000.
(b) What conclusions about the management of accounts receivable can be drawn from these data?