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.

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P8-8A

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.

Instructions: [1] 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.

[2] Enter the balance at July 1 in the receivable accounts and post the entries to all of the receivable accounts. (Use T-accounts.)

[3] Show the balance sheet presentation of the receivable account at July 31.