P8-7A : The President of Giraldi Enterprises asks if you could indicate the impact certain transactions have on the following ratios:
Transaction Current Ratio (2:1) Accounts Receivable Turnover (10x) Average collection period (36.5 days)
1] Received %5,000 on cash sale.
The cost of goods sold was $2,600
2] Recorded bad debt expense of $500
using allowance method.
3] Wrote off a $100 account receivable as
uncollectible (uses allowance method.)
4] Recorded $2,500 sales on account.
The cost of the good sold was $1,500.
Instructions : Complete the table, indicating whether each transaction will increase (I), decrease (D), or have no effect (NE) on the specific ratios provided for Giraldi Enterprises.
Kolton Copany closes its books on its July 31 year-end. The company does not make entries to accrue for interest except at its year-end. On June 30, the Notes Receivable account balance is $23,800. Notes Receivable include the following.
Date Maker Face Value Term Maturity Date Interest Rate
April 21 Booth Inc. $ 6,000 90 days July 20 8%
May 25 Mannling Co 7,800 60 days July 24 10%
June 30 ANF Corp 10,000 6 months December 31 6%
During July, the following transactions were completed.
July 5 Made sale of $4,500 on Kolton credit cards,
14 Made sale of $600 on Visa credit cards, The credit card service charge i2 3%
20 Received payment in full from Booth Inc. in the amount due.
24 Received payment in full from manning Co. on the amount due.
 Journalize the July transactions and the July 31 adjusting entry for accrued interest receivable. (Interest is computed using 360 days, omit cost of
goods sold entries.
 Enter the balance at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T-accounts.)
 Show the balance sheet presentation of
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