Homework Answers
1) Increase cash (CA). Hence current ratio increase.Current ratio = Current asset/Current liabilities
No effect on Accounts receivable.Since no change in credit sales or debtors .
Accounts receivable turnover = Credit sale/Average debtors
No effect on Average collection period because no change in accounts receivable turnover.
no. of days/Accounts receivable turnover
2)Bad debt expense is debited and provision for bad debt is credited
Current ratio decrease because provision for bad debt (CL) is increased
Decrease in debtors will increase Accounts receivable turnover
Accounts collection period will decrease.
3) provision for bad debt is debited and Accounts receivable is credited.
no effect because CA & CL both are decreased.
Decrease in debtors will increase Accounts receivable turnover
Accounts collection period will decrease.
4) Accounts receivable is debited and Sale is credited
Current ratio increase with change in Accounts receivable (CA)
Decrease Accounts receivable turnover
Accounts collection period increase
CA = current asset
CL = current liabilities
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of $17,100.
3. AlarmIT recorded bad debts expense for the...
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