[The following information applies to the questions displayed below.] The following information is taken from the balance sheet of Menendez Company on January 1, Year 1: Current Assets$12,000 Current Liabilities$4,000 Equipment 52,000 Long-term Liabilities 32,000 Land 36,000 Common Stock 64,000 Total Assets$100,000 Total Liab. & Equity$100,000 On January 2, Year 1, the company recorded the following transaction:Accounts receivable8,000 Service revenue 8,000How will this transaction affect the current ratio?
A. It will have no effect on the current ratio.
B. It will increase the current ratio to 5:1.
C. It will increase the current ratio to 3:1.
D. It will decrease the current ratio to 1:1.
Answer: B
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