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The president of Carla Vista Enterprises asks if you could indicate the impact certain transactions have on the following ratios. Complete the table, indicating
The president of Carla Vista Enterprises asks if you could indicate the impact certain transactions have on the following ratios. Complete the table, indicating whether each transaction will increase, decrease, or have no effect on the specific ratios provided for Carla Vista Enterprises. Transaction Current Ratio (2:1) Accounts Receivable Turnover (10X) Average Collection Period (36.5 days) Received $7,000 on cash sale. The cost of the goods sold was $3,640 Increase 2. Recorded bad debt expense of $700 using allowance method. No Effect No Effect Decrease Increase Decrease 3. Wrote off a $140 account receivable as uncollectible (Uses allowance method.) Decrease Increase Decrease 4. Recorded $3,500 sales on account. The cost of the goods sold was $2,100. Increase Decrease Increase
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