Information follows for Patuanak Company:
1. The beginning of the year Accounts Receivable balance was 525,000.
2. Net sales for the year were $410,000. (Credit sales were $200,000 of the total sales.) Patuanak does not offer cash discounts.
3. Collections on accounts receivable during the year were $140,000.
(a) Prepare summary journal entries to record the items noted above.
(b) Calculate Patuanak Company's accounts receivable turnover ratio for the year. How old is the average receivable?
(c) Use the turnover ratio calculated in (b) to analyze Patuanak Company’s; liquidity. The turnover ratio last year was 4.85.