CCC8 CONTINUING COOKIE CHRONICLE
(a) Answers to Natalie’s questions
1. Calculations you should perform on the statements are:
• Working Capital = Current Assets – Current Liabilities
• Current Ratio = Current Assets ÷ Current Liabilities
• Inventory Turnover = Cost of Goods Sold ÷ Average Inventory
2. Other alternatives to extending credit to Curtis include:
3. The advantages of allowing customers to use credit cards include
making the purchase easier for the customer, potentially increasing
sales, as customers are not limited to the amount of cash in their
wallet, and reducing the accounts receivable you have to manage if
credit cards are used instead of granting credit to customers.
CONTINUING COOKIE CHRONICLE (Continued)
(b)
June 1
Accounts Receivable—Lesperance …………..
1,100
Sales Revenue ………………………………….
1,100
Inventory…………………………………………..
2
No entry
30
Cash ($1,050 + ($900 X 97%)) ……………………
1,923
Service Charge Expense ($900 X 3%) ……….
27
Service Revenue ($1,050 + $900) ……….
1,950
30
Service Charge Expense ………………………….
75
Cash …………………………………………………
75
30
Notes Receivable ……………………………………..
1,100
Accounts Receivable—Lesperance ……
1,100
July 15
Cash ($1,100 X 97%) …………………………………
1,067
Service Charge Expense ($1,100 X 3%)……..
33
Sales Revenue ………………………………….
1,100
Cost of Goods Sold ………………………………….
Inventory…………………………………………..
30
Cash ($1,200 + ($1,200 X 97%)) …………………
2,364
Service Charge Expense ($1,200 X 3%)……..
36
Service Revenue ($1,200 + $1,200) ……….
2,400
31
Service Charge Expense ………………………….
75
Cash …………………………………………………
75