If the allowance method is used,how do the two entries recorded in connection with the recovery of an uncollectible account affect the elements of the financial statements? (Hint: Consider the effect of both entries taken together.)
A)No effect on total assets or stockholders' equity
B)Increase stockholders' equity
C)Decrease total assets
D)Increase total assets and stockholders' equity

Question

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When a company receives payment on a previously written-off account,it must first reinstate the written-off account.The reinstatement increases assets (accounts receivable)and decreases assets (by increasing the allowance for doubtful accounts,a contra asset account),with no net effect on any of the elements of the financial statements.Then,the company records collection of the receivable,which increases assets (cash)and decreases assets (accounts receivable),again with no net effect on total assets,total liabilities,or stockholders' equity.The event is reported as a cash inflow for operating activities on the statement of cash flows.

If the Allowance Method Is Used,how Do the Two Entries