The Data Presented Below Is for Falconi, Inc ? What Is the Effect on Liquidity When Falconi Records

The data presented below is for Falconi, Inc.for 2016. $\begin{array}{lr}\text { Credit sales during the year } & \$ 2,100,000 \\\text { Accounts receivable-December 31, 2016 } & 395,000 \\\text { Allowance for doubtful accounts-December 31,2016 } & 20,000 \\\text { Bad debt expense for the year } & 17,000\end{array}$ ? 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

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