Buttercup Florist uses the allowance method to account for uncollectible accounts.Unable to collect a $150 account from a customer,Buttercup determined it was uncollectible.How would the write-off of this account affect the elements of the company's financial statements?

A)Option A
B)Option B
C)Option C
D)Option D

Question

Buttercup Florist uses the allowance method to account for uncollectible accounts.Unable to collect a $150 account from a customer,Buttercup determined it was uncollectible.How would the write-off of this account affect the elements of the company's financial statements?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The write-off decreases assets (accounts receivable)and increases assets (decrease to allowance for doubtful accounts),resulting in no net change to total assets,total liabilities,or stockholders' equity.A write-off does not affect the statement of cash flows.

Buttercup Florist Uses the Allowance Method to Account for Uncollectible