Presented below is information related to Nash Inc. NASH

Presented below is information related to Nash Inc.

NASH INC.
BALANCE SHEET
DECEMBER 31, 2020

Cash $45,400 Notes payable (short-term) $49,700
Receivables $110,000 Accounts payable 32,100
   Less: Allowance 15,200 94,800 Accrued liabilities 5,000
Inventory 171,500 Common stock (par $5) 262,400
Prepaid insurance 7,900 Retained earnings 141,800
Land 20,200
Equipment (net) 151,200   
$491,000 $491,000

NASH INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2020

Sales revenue $1,398,700
Cost of goods sold
   Inventory, Jan. 1, 2020 $202,000
   Purchases 783,700
   Cost of goods available for sale 985,700
   Inventory, Dec. 31, 2020 (171,500 )
   Cost of goods sold 814,200
Gross profit on sales 584,500
Operating expenses 168,800
Net income $415,700

(a)

Correct answer iconYour answer is correct.

Compute the following ratios or relationships of Nash Inc. Assume that the ending account balances are representative unless the information provided indicates differently.

(1) Current ratio 3.68 times
(2) Inventory turnover 4.36 times
(3) Accounts receivable turnover 14.75 times
(4) Earnings per share $ 7.92
(5) Profit margin on sales 29.72 %
(6) Return on assets on December 31, 2020 84.66 %

(b)

Indicate for each of the following transactions whether the transaction would improve, weaken, or have no effect on the current ratio of Nash Inc. at December 31, 2020.

(1) Write off an uncollectible account receivable, $2,200.                                                                       No effect Improve Weaken
(2) Purchase additional capital stock for cash.                                                                       No effect Improve Weaken
(3) Pay $40,000 on notes payable (short-term).                                                                       No effect Improve Weaken
(4) Collect $23,000 on accounts receivable.                                                                       No effect Improve Weaken
(5) Buy equipment on account.                                                                       No effect Improve Weaken
(6) Give an existing creditor a short-term note in settlement of account.                                                                       No effect Improve Weaken

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