Digital Corporation
The following data concern Digital Corporation for 2012.
$\begin{array}{ll}
\text { Credit sales during the year } & \$ 2,400,000 \
\text { Accounts receivable--December } 31,2012 & 410,000 \
\text { Allowance for bad debts--December } 31,2012 & 55,000 \
\text { Bad debt expense for the vear } & 35,000
\end{array}$
-Refer to the information provided for Digital Corporation. What are the effects on the accounting equation when Digital writes off a bad debt under the allowance method?

Question

Digital Corporation 
The following data concern Digital Corporation for 2012.
$\begin{array}{ll}
\text { Credit sales during the year } & \$ 2,400,000 \
\text { Accounts receivable--December } 31,2012 & 410,000 \
\text { Allowance for bad debts--December } 31,2012 & 55,000 \
\text { Bad debt expense for the vear } & 35,000
\end{array}$ 
-Refer to the information provided for Digital Corporation. What are the effects on the accounting equation when Digital writes off a bad debt under the allowance method?

Quizplus · Accepted Answer

When a bad debt is written off under the allowance method, the allowance for bad debts (a contra-asset account) is reduced, and accounts receivable (an asset account) is also reduced by the same amount, resulting in no net effect on total assets or equity.

Digital Corporation the Following Data Concern Digital Corporation for 2012

Digital Corporation
the Following Data Concern Digital Corporation for 2012