Presented below is information for Jones Company. 1. Beginning-of-the-year Accounts Receivable balance was $15,000. 2. Net sales (all on account) for the year were $100,000. Jones does not offer cash discounts. 3. Collections on accounts receivable during the year were $70,000. Instructions a. Prepare (summary) journal entries to record the items noted above. b. Compute Jones’s accounts receivable turnover and days to collect receivables for the year. The company does not believe it will have any bad debts. c. Use the turnover ratio computed in (b) to analyze Jones’s liquidity. The turnover ratio last year was 6.0.
Presented below is information for Jones Company. 1. Beginning-of-the-year Accounts Receivable balance was $15,000. 2. Net sales (all on account) for the year were $100,000. Jones does not offer cash discounts. 3. Collections on accounts receivable during the year were $70,000. Instructions a. Prepare (summary) journal entries to record the items noted above. b. Compute Jones’s accounts receivable turnover and days to collect receivables for the year. The company does not believe it will have any bad debts. c. Use the turnover ratio computed in (b) to analyze Jones’s liquidity. The turnover ratio last year was 6.0.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Presented below is information for Jones Company.
1. Beginning-of-the-year
2. Net sales (all on account) for the year were $100,000. Jones does not offer cash discounts.
3. Collections on accounts receivable during the year were $70,000.
Instructions
a. Prepare (summary)
b. Compute Jones’s accounts receivable turnover and days to collect receivables for the year. The company does not believe it will have any
c. Use the turnover ratio computed in (b) to analyze Jones’s liquidity. The turnover ratio last year was 6.0.
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