Question

Presented below is information for Nash Company.

1.		Beginning-of-the-year Accounts Receivable balance was $22,500.
2.		Net sales (all on account) for the year were $107,600. Nash does not offer cash discounts.
3.		Collections on accounts receivable during the year were $82,000.

Prepare (summary) journal entries to record the items noted above. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
2.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
3.	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

Compute Nash’s accounts receivable turnover and days to collect receivables for the year. The company does not believe it will have any bad debts. (Round answers to 2 decimal places, e.g. 4.57.)

Accounts receivable turnover			times
Days to collect accounts receivable			days

eTextbook and Media

List of Accounts

Use the turnover ratio computed in (b) to analyze Nash's liquidity. The turnover ratio last year was 5.5.

This is a select an option                                                                      bad/good trend in liquidity.

Answer 1

No.	Account Titles and Explanation	Debit	Credit
1.	No Entry
	No Entry
2.	Accounts receivable	107,600
	Sales		107,600
3.	Cash	82,000
	Accounts receivable		82,000

Beginning accounts receivable = $22,500

Ending accounts receivable = Beginning accounts receivable + Sales - Cash received from customers

= 22,500+107,600-82,000

= $48,100

Average accounts receivable = (Opening accounts receivable + Ending accounts receivable) / 2

= ( 22,500+48,100)/2

= $35,300

Accounts receivable turnover ratio = Sales/ Average accounts receivable

= 107,600/35,300

= 3.04

Days to collect accounts receivable = 365/Accounts receivable turnover ratio

= 365/3.04

= 120 days

Bad trend in liquidity since Accounts receivable turnover ratio has decreased from the last year.

Kindly comment if you need further assistance.

Thanks!!!