Allowance for Doubtful Accounts has a credit balance of $2,000 immediately before the write-off of a $600 account receivable.The balance of Allowance for Doubtful Accounts immediately after the write-off is
A) $600 debit.
B) $1,400 credit.
C) $1,400 debit.
D) $2,600 credit.

Question

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The Allowance for Doubtful Accounts is a contra-asset account that is used to reduce the value of accounts receivable that are considered to be uncollectible. When an account receivable is written off, the Allowance for Doubtful Accounts is increased by the amount of the write-off. In this case, the Allowance for Doubtful Accounts has a credit balance of $2,000 before the write-off, and the account receivable that is written off is $600. Therefore, the balance of the Allowance for Doubtful Accounts after the write-off is $2,000 + $600 = $2,600.

Allowance for Doubtful Accounts Has a Credit Balance of $2,000