Ayeza Incs accountant came with the following statements regarding the companys credit management policies:

The entry to record the estimated bad debts debits an expense account and credits a contra-asset account. Thus, this entry increases expenses, reducing both net income and owners' equity, as well as decreasing assets by reducing the amount of the net accounts receivable. It is also believed that writing off an account under the allowance method has no effect on the net financial statement amounts. Accounts Receivable and Allowance for Uncollectible Accounts are both reduced by this entry, which has no other effect on the net accounts receivable whatsoever. Net income and owners' equity are both unaffected. The collection of an account previously written off has very little effect on the financial statements in total. Net income and owners' equity and total assets are unaffected. However, the composition of the assets is altered. Therefore, The Cash account increases and Allowance for Uncollectible Accounts increases. Accounts Receivable will be increased and decreased for the same amount.

How would you evaluate the statement of the accountant? Do you notice any weaknesses in the adjustments and writing off process of uncollectible accounts? What suggestions do you recommend to improve the financial reporting?

Ayeza Inc.s retail division reports current assets of $90,000, total assets of $210,000, current liabilities of $50,000, and total liabilities of $57,500 in the year 2019. The company is trying to obtain a bank loan for $20,000 which would be financed over six months. The terms of the loan agreement specify that the company's current ratio cannot fall below 1.5.

Calculate the current ratio before and after the loan. Do you think the loan will be granted? Justify your answer!

The company also had sales and cost of sales of $1,850,000 and $1,100,000 respectively in 2020. The company had shareholders equity of $925,000, liabilities of $775,000 and assets of $1,700,000. Included in the companys assets was inventory valued at $100,000 which was a $50,000 increase from the previous year's holdings.

Calculate the gross profit margin and inventory turnover for the company. Do you advise any improvements for the company?