Information follows for Patuanak Company: 1. The beginning of the year Accounts Receivable balance was 525,000. 2.

Question:

Information follows for Patuanak Company:
1. The beginning of the year 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 during the year were $140,000.
Instructions
(a) Prepare summary journal entries to record the items noted above.
(b) Calculate Patuanak Company's 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.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...