Reference no: EM133734659

Problem: Accounting Understanding Financial Statements Research Paper

For this case study, your group will analyze and evaluate the business and financial performance of Nicole's Gateway Spa (NGS). Your team of 4-5 members has been hired by Nicole Gateway Spa as their Financial Consultants. NGS is going through changes and would like your advice in the form of a report on several accounting topics. When preparing the report, consider the ratios and interpretation of profitability, solvency, and liquidity. The written recommendation to NGS should cover the following topics: CLO 1: As a small business, NGS has made changes in their Accounts Receivable Policy in the past year. But Nicole is unsure whether the changes have made a difference. Calculate 2021 and 2020 Days to Collect Receivable and Receivables Turnover. Evaluate the short-term solvency for NGS based on the year-over-year change. Provide recommendations for Accounts Receivable policies that could reduce the days to collect. CLO 2: NGS is considering purchasing a tanning bed for $15,000 to add a new service to her business. Nicole was not aware that there were different methods for calculating amortization. Nicole would like to understand the difference between each method, and which method is suitable for her business. Calculate amortization and record the journal entry for Year 1 using the following methods: Straight line methodology assuming a useful life of 10 years. Double declining methodology assuming a rate of 10%. Units of production methodology, where a total of 500 uses. Nicole forecasts that the tanning bed will be used 50 times in Year 1. What is the difference between the three methods? Advise NGS which amortization methodology is suitable for her business and why. NGS is owned by Nicole, who is a sole proprietor. NGS has recently heard about incorporation. Advise NGS as what are the advantages for having a corporation. Calculate NGS'.