Detecting Accounting Fraud 1st Edition by Cecil Jackson

Exercise 38

Examine the following extracts from Blake Co.'s income statement and balance sheet for the previous three years.

You also read in the financial press that Blake Co. sold $2,000 of its accounts receivable in year 3.
Required
a. Calculate the ratio of accounts receivable as a percentage of sales for years 1, 2, and 3 without taking into account what you read about the sale of Blake's accounts receivable.
b. Calculate the ratio of accounts receivable as a percentage of sales for years 1, 2, and 3 after adjusting for the sale of Blake's accounts receivable.