A2Z Events
The following information is from the company's records for Year 1:
$\begin{array}{llr}
\text {Credit sales during the year } &\$2,400,000\
\text { Accounts receivable-December 31, Year 1 } &410,000\
\text {Allowance for doubtful accounts-December 31, Year 1 } &55,000\
\text {Bad debt expense for the year } &70,000\
\end{array}$

-Refer to the figure A2Z Events.What are the effects on the accounting equation when the company writes off a bad debt under the allowance method?

Question

A2Z Events
The following information is from the company's records for Year 1:
 $\begin{array}{llr}
  \text {Credit sales during the year  } &\$2,400,000\
 \text { Accounts receivable-December 31, Year 1 } &410,000\
 \text {Allowance for doubtful accounts-December 31, Year 1  } &55,000\
 \text {Bad debt expense for the year  } &70,000\
\end{array}$

-Refer to the figure A2Z Events.What are the effects on the accounting equation when the company writes off a bad debt under the allowance method?

Quizplus · Accepted Answer

When a company writes off a bad debt under the allowance method, it reduces accounts receivable and the allowance for doubtful accounts by the same amount. This action does not affect the total assets or shareholders' equity because it's essentially moving amounts within assets (from one asset account to another), not changing the total assets or the equity.

A2Z Events the Following Information Is from the Company's Records

A2Z Events
the Following Information Is from the Company's Records