Question : 168. Briefly explain the accounting treatment for estimated sales returns at : 1412701

168.

Briefly explain the accounting treatment for estimated sales returns at the end of an accounting period for which cash has already been collected from customers. 
 
 

169.

Briefly explain why the direct write-off of uncollectible accounts is not permitted by GAAP if bad debts are material. 
 
 

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170.

Last year, Simpson Company had a receivables turnover ratio of 12. Homer, Simpson's president, was delighted when the ratio went to 18 for this year. This year, Simpson's long-standing credit terms of net 30 were changed to net 10. Should Homer be happy? Explain. 
 
 

Homer needs to compare the average collection periods and credit policies between last year and the current year. In Simpson's case that information is as follows: