Complete the table below by indicating whether the transactions or economic events would increase, decrease, or have no effect on the financial ratios in the period they occur. Assume the entity uses an accrual method for estimating the bad debt expense and the allowance for uncollectibles. Also assume the current and quick ratios are greater than one before each of the eventsoccurs.

Transcribed Image Text:

Average Accounts collection period Profit CurrentQuick receivable of accounts Debt-to- margin ratio ratio turnover ratio receivable equity ratio ratio Writeoff of an account receivable Recording the allowance for discounts Recording the bad debt expense Sale of merchandise on credit, payment due in three years