On December 1, Anson's Drug Store concluded that a customer's $325 account receivable was uncollected and that the account should be written off. What effect will this write-off have on the company's net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?

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When using the direct write-off method, bad debts are expensed at the time they are determined to be uncollectible. Therefore, when the $325 account is written off, it will decrease net income by $325. Additionally, because the account was an asset, the write-off will decrease total assets by $325.

On December 1, Anson's Drug Store Concluded That a Customer's