The Coronado Pub provides catering services to local businesses The following information was available for The Coronado Pub for the years ended December 31, 2019 and 2020 December 31, 2019 December 31, 2020 Cash $ 1,870 $ 1,720 Accounts receivable 45,800 Allowance for doubtful accounts 570 Other current assets 8,540 7,950 Current liabilities 37,900 44,700 Total credit sales 205,000 254,000 Collections on accounts receivable 191,000 230,000 Coronado management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances 1 The cash reported at December 31, 2020, reflects the following items petty cash $1,600 and postage stamps $120 The other current assets balance at December 31, 2020, includes the checking account balance of $4,130 2 On November 30, 2020, Coronado agreed to accept a 6 month, $5,130 note bearing 12 interest, payable at maturity, from a major client in settlement of a $5,130 bill The above balances do not reflect this transaction 3 Coronado factored some accounts receivable at the end of 2020 It transferred accounts totaling $10,000 to Final Factor, Inc with recourse Final Factor will receive the collections from Coronados customers and will retain 2 of the balances Final Factor assesses Coronado a finance charge of 3 on this transfer The fair value of the recourse liability is $390 However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above 4 Coronado charged off uncollectible accounts with balances of $1,540 On the basis of the latest available information, the 2020 provision for bad debts is estimated to be 2 5 of accounts receivable Compute Coronados current ratio and accounts receivable turnover for December 31, 2020 The accounts receivable turnover in 2019 was 4 37 (Round answers to 2 decimal places, e g 52 75 ) Current ratio 1 Accounts receivable turnover times

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 29, 2024

The Coronado Pub provides catering services to local businesses. The following information was available for The Coronado Pub for the years ended December 31, 2019

The Coronado Pub provides catering services to local businesses. The following information was available for The Coronado Pub for the years ended December 31, 2019 and 2020.

	December 31, 2019		December 31, 2020
Cash	$	1,870	$	1,720
Accounts receivable		45,800		?
Allowance for doubtful accounts		570		?
Other current assets		8,540		7,950
Current liabilities		37,900		44,700
Total credit sales		205,000		254,000
Collections on accounts receivable		191,000		230,000

Coronado management is preparing for a meeting with its bank concerning renewal of a loan and has collected the following information related to the above balances.

1.		The cash reported at December 31, 2020, reflects the following items: petty cash $1,600 and postage stamps $120. The other current assets balance at December 31, 2020, includes the checking account balance of $4,130.
2.		On November 30, 2020, Coronado agreed to accept a 6-month, $5,130 note bearing 12% interest, payable at maturity, from a major client in settlement of a $5,130 bill. The above balances do not reflect this transaction.
3.		Coronado factored some accounts receivable at the end of 2020. It transferred accounts totaling $10,000 to Final Factor, Inc. with recourse. Final Factor will receive the collections from Coronados customers and will retain 2% of the balances. Final Factor assesses Coronado a finance charge of 3% on this transfer. The fair value of the recourse liability is $390. However, management has determined that the amount due from the factor and the fair value of the resource obligation have not been recorded, and neither are included in the balances above.
4.		Coronado charged off uncollectible accounts with balances of $1,540. On the basis of the latest available information, the 2020 provision for bad debts is estimated to be 2.5% of accounts receivable.

Compute Coronados current ratio and accounts receivable turnover for December 31, 2020. The accounts receivable turnover in 2019 was 4.37. (Round answers to 2 decimal places, e.g. 52.75.)