22 Imagine that this company makes a sale of its product. Describe a Q3 possible sales transaction and list the journal entry that the company would make to recognize the sale (assume the sale is on account.) For this assignment, ignore the cost of goods sold entry. Remember, each journal entry has at least one debit and one credit. ANALYSIS: Investors and managers keep a watchful eye on the relationship among sales, accounts receivable, and cash collections. If sales increase, then accounts receivable are also expected to increase. But a disproportionate increase in accounts receivable might signal trouble. Perhaps the company increased its sales by loosening its credit policy, and these receivables may be difficult or impossible to collect. Such receivables are considered less liquid. Recall that liquidity is measured by how quickly certain assets can be converted to cash. (illustration 8-21 in your textbook)