Archer Company has significant amounts of accounts receivable,and experiences uncollectible accounts from time to time.Archer uses the percent-of-sales method to account for uncollectible accounts.When Archer Company writes off an uncollectible receivable,what is the effect of that single transaction?

Question

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Writing off an uncollectible receivable under the percent-of-sales method affects the allowance for doubtful accounts and accounts receivable, but it does not impact net income directly since the expense was already recognized when the bad debt expense was estimated and recorded.

Archer Company Has Significant Amounts of Accounts Receivable,and Experiences Uncollectible