Question: The president of Mossy Enterprises asks if you could indicate the impact certain transactions have on the following ratios.
1. Received $5,000 on cash sale. The cost of the goods sold was $2,600.
2. Recorded bad debt expense of $500 using allowance method.
3. Wrote off a $100 account receivable as uncollectible (Uses allowance method.)
4. Recorded $2,500 sales on account. The cost of the goods sold was $1,500
Instructions: Complete the table, indicating whether each transaction will increase (I), decrease (D), or have no effect (NE) on the specific ratios provided for Mossy Enterprises.