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  3. indicate the effects of the following errors on ea

Indicate the effects of the following errors on each of the listed in the...

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Accounting

Indicate the effects of the following errors on each of the listed in the column headings Use the following symbols : O = overstated, U understated , and NE = no effectAssume that the company does not use the direct write -off method for uncollectible accounts.

Transaction

Gross

Profit

Current

Ratio

Receivables

Income

Net

Income

Retained

Earnings

Working

Capital
a . Recorded uncollectible accounts expense by debiting Sales and crediting Accounts Receivable.
b. Wrote off an account receivable deemed uncollectible by debiting Uncollectible Accounts Expense and crediting Accounts Receivable .
c. Collected cash from credit customers settlement of outstanding accounts receivable by debiting Cash and credit- ing Sales .
  • Gross Profit =Sales - Cost of Goods Sold
  • Current Ratio =Current Assets / Current Liabilities
  • Receivables Turnover Rate =Sales/ Average Accounts Receivable ( net)
  • Working Capital = Current Assets - Current Liabilities

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