Presented below is information related to Nash Inc.
|Cash||$45,400||Notes payable (short-term)||$49,700|
|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|
|Cost of goods sold|
|Inventory, Jan. 1, 2020||$202,000|
|Cost of goods available for sale||985,700|
|Inventory, Dec. 31, 2020||(171,500||)|
|Cost of goods sold||814,200|
|Gross profit on sales||584,500|
Correct answer iconYour answer is correct.
Compute the following ratios or relationships of Nash Inc. Assume that the ending account balances are representative unless the information provided indicates differently.
|(3)||Accounts receivable turnover||14.75||times|
|(4)||Earnings per share||$||7.92|
|(5)||Profit margin on sales||29.72||%|
|(6)||Return on assets on December 31, 2020||84.66||%|
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|