Buttercup Florist uses the allowance method to account for uncollectible accounts. Unable to collect a $150 account from a customer, Buttercup determined it was uncollectible. Which of the following statements is correct regarding the effect of writing-off a receivable?

Question

Quizplus · Accepted Answer

When a receivable is written off using the allowance method, the allowance for doubtful accounts is reduced, and accounts receivable is reduced by the same amount. This means the net realizable value of receivables and total assets remain unchanged.

Buttercup Florist Uses the Allowance Method to Account for Uncollectible