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.How would the write-off of this account affect the elements of the company's financial statements?

Question

Quizplus · Accepted Answer

The write-off decreases assets (accounts receivable) and increases assets (decrease to allowance for doubtful accounts), resulting in no net change to total assets, total liabilities, or stockholders' equity. A write-off does not affect the statement of cash flows.

Buttercup Florist Uses the Allowance Method to Account for Uncollectible