Certain items taken from the financial statements, the notes thereto and other records of Lucky Nine Ltd have been expressed as percentages of net revenue.

Net revenue was $600 000 in 2019; it increased by 12% in 2020. Average trade accounts receivable were $69 000 in 2020 and $66 000 in 2019. Credit sales were 75% of total revenue in both years.

Required

(a) By what percentage did the entity’s profit increase or decrease in 2020 compared with 2019? Prepare a comparative statement of profit or loss (showing relevant items) including common size figures to support your answer.

(b) Calculate and comment on the average collection period for the company’s trade accounts receivable for both years, showing the basis for your calculation.

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Revenue (net) Beginning inventories Purchases (net) Ending inventories Selling and distribution expenses Administrative expenses Income tax expense Percentage of net revenue 2020 2019 100 100 30 32 60 61 26 33 14 12 9 10 3.9 5.4