Abbot Safe & Lock the Following Information Was Obtained from the Company's

question 123

Multiple Choice

Abbot Safe & Lock The following information was obtained from the company's records for 2012:
$\begin{array}{l} \text {Credit sales dwing the year } &\$ 3,200,000 \\ \text { Accounts receivable-December 31, 2012 } &325,000 \\ \text {Allowance for doubtful ac counts-December 31, 2012 } &35,000 \\ \text {Bad debt expense for the year } &20,000\end{array}$
-Refer to Abbot Safe & Lock.What is the effect on liquidity when the company records its estimate for bad debt expense using the allowance method?

• A)Liquidity decreases
• B)Liquidity increases
• C)Liquidity stays the same
• D)Liquidity both increases and decreases

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