On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $30,000 and $500, respectively. During the year the company reported $75,000 of credit sales. There were $550 of receivables written-off as uncollectible in 2014. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales.
The entry to recognize the write-off of an uncollectible account will
A) increase total assets and total equity.
B) increase total assets and decrease total equity.
C) decrease total assets and total equity.
D) not affect total assets or total equity.

Question

Quizplus · Accepted Answer

The write-off of an uncollectible account decreases both Accounts Receivable and the Allowance for Doubtful Accounts by the same amount, leaving total assets and total equity unchanged.