The entry to provide for uncollectible accounts under the allowance method affects both the statement of income and the statement of financial position by
A)increasing expenses and increasing the carrying amount of the accounts receivable.
B)decreasing expenses and increasing the carrying amount of the accounts receivable.
C)increasing expenses and decreasing the carrying amount of the accounts receivable.
D)decreasing expenses and decreasing the carrying amount of the accounts receivable.

Question

Quizplus · Accepted Answer

Under the allowance method, the entry to provide for uncollectible accounts is recorded by debiting the bad debt expense account (increasing expenses) and crediting the allowance for doubtful accounts (decreasing the carrying amount of the accounts receivable). This reflects a decrease in the value of the accounts receivable on the statement of financial position. So, the correct answer is C: increasing expenses and decreasing the carrying amount of the accounts receivable.

The Entry to Provide for Uncollectible Accounts Under the Allowance