The following data are from the company's records for the year ended December 31:

-Refer to A2Z Events. What are the effects on the accounting equation when the company writes off a bad debt under the allowance method?

Question

The following data are from the company's records for the year ended December 31:
 
-Refer to A2Z Events. What are the effects on the accounting equation when the company writes off a bad debt under the allowance method?

Quizplus · Accepted Answer

When a company writes off a bad debt under the allowance method, it reduces accounts receivable and the allowance for doubtful accounts by the same amount. This action does not affect the overall assets or stockholders' equity because the allowance for doubtful accounts had already anticipated the loss.

The Following Data Are from the Company's Records for the Year