The following information is taken from the balance sheet of Menendez Company on January 1, Year 1:Current Assets$18,000? Current Liabilities$8000? Equipment 38,000? Long-term Liabilities 28,000? Land 30,000? Common Stock 50,000? Total Assets$86,000? Total Liab. & Equity$86,000? On January 2, Year 1, the company recorded the following transaction: Accounts receivable18,000? Service revenue 18,000? How will this transaction affect the current ratio?
A. It will increase the current ratio to 4.5:1.
B. It will increase the current ratio to 2.3:1.
C. It will decrease the current ratio to 1:1.
D. It will have no effect on the current ratio.
Answer: A
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