The data presented below is for Falconi, Inc for 2016. Credit sales during the year $2,100,000 Accounts receivable—December 31, 2016 295,000 Allowance for doubtful accounts—December 31, 2016 28,000 Bad debt expense for the year 17,000 What is the effect on liquidity when Falconi 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
a
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