Chapter 7, Problem 20E

To determine

Accounts Receivable: It is defined as due amount from the buyers who have purchased goods and services on credit from the sellers.

(a)

To pass the journal entries to record given items.

To determine

(b)

To compute: To compute the accounts receivable turnover.

$\begin{array}{ccc}\text{Accounts Receivable Turnover}& =& \frac{\text{Net Sales }}{\text{Average Trade Receivable }\left(\text{net}\right)}\\ & =& \frac{\$100,000}{\frac{\left(\$15,000+\$45,000*\right)}{2}}\\ & =& 3.33\text{ times}\end{array}$

$\begin{array}{ccc}\text{Days to collect accounts receivable}& =& \frac{365}{3.33}\\ & =& 109.61\text{ days}\end{array}$

To determine

(c)

To analyze: To analyze J Co’s liquidity.