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 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 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 assets.

Buttercup Florist Uses the Allowance Method to Account for Uncollectible