On December 1, 2013, 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 2013 net income and balance sheet totals assuming the direct write-off method is used to account for bad debts?

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Under the direct write-off method, bad debts are only recognized when they become uncollectible. Writing off the $325 account receivable means that it is now considered uncollectible and will be removed from the accounts receivable balance on the balance sheet, resulting in a decrease in total assets. This write-off does not have an impact on expenses as the company already recorded the sale and recognized revenue. Therefore, the write-off results in a decrease in net income.

On December 1, 2013, Anson's Drug Store Concluded That a Customer's