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Answer (B) is correct . Because the company uses the direct write-off method, the original entry involved a debit to a bad debt expense account (closed to retained earnings). The subsequent collection required a debit to cash and a credit to bad debt expense or retained earnings. Thus, only one current asset account was involved in the collection entry, and current assets (cash) increased as a result. If current assets increase and no change occurs in current liabilities, the current ratio and working capital both increase.

Answer (A) is incorrect because The current ratio and working capital increase.
Answer (C) is incorrect because The current ratio and working capital increase.
Answer (D) is incorrect because The current ratio and working capital increase.