Azim is a wholesaler. He sells goods on both cash and credit basis. Terms of business for all credit sales is 30 days. Azim has provided the following information for the year ended 31 December 2023. $ Cash sales 18170 Credit sales 392600 Credit purchases 278429 Inventory at 31 December 2022 24074 Inventory at 31 December 2023 25600 Money owed by credit customers at 31 December 2023 42375 Money owed to credit suppliers at 31 December 2023 21603 During the previous year, Azim's trade receivables turnover had been 35 days and he is concerned that this is too high. Azim had been considering using the services of a debt collection company to improve the speed at which he receives his money from his credit customers. Azim had calculated his gross profit margin and profit margin for the year ended 31 December 2023. He wants to compare these to his competitor Baher who has a similar sized business. Azim Baher Gross profit margin 33% 37% Profit margin 10% 12% During the year ended 31 December 2023, Azim took goods for his own use, $340, but had not entered this in his accounting records. To correct this error, Azim made a year-end adjustment.

1. (a)Using the information provided, calculate the following ratios for the year ended 31 December 2023. Show your workings. Ratio Inventory turnover (correct to 2 decimal places) Trade receivables turnover (round up your answer to the nearest whole day) Trade payables turnover (round up your answer to the nearest whole day)[7]
2. (b)Advise Azim whether he should appoint a debt collection company. Justify your answer with two advantages and two disadvantages.[5]
3. (c)Suggest two other measures that Azim might take to reduce his trade receivables turnover period. 1. 2.[2]
4. (d)(i)Suggest one action that Azim might take to improve his: Gross profit margin[1]
5. (d)(ii)Suggest one action that Azim might take to improve his: Profit margin[1]
6. (e)(i)Prepare the journal entry that Azim would need to make to correct this error. A narrative is not required.[2]
7. (e)(ii)Complete the table below by placing a tick (✔) to indicate the effect of correcting this error on Azim's gross profit and closing capital. gross profit | closing capital | increase | decrease | no effect[2]