On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $71,800 and $3,100, respectively. During Year 2, Kincaid reported $194,000 of credit sales, wrote off $1,800 of receivables as uncollectible, and collected cash from receivables amounting to $234,500. Kincaid estimates that it will be unable to collect one percent (1%)of credit sales.Which of the following describes the effects of writing off the uncollectible accounts?

Question

Quizplus · Accepted Answer

Writing off uncollectible accounts reduces both Accounts Receivable and the Allowance for Doubtful Accounts by the same amount, leaving total assets and stockholders' equity unchanged.