Ace Computing Company
On January 1, Year 1, the accounts receivable and the allowance for doubtful accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were receivables of $500 written off as uncollected in Year 1. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the figure Ace Computing Company.What will be the impact of the entry to recognize the write-off of the specific uncollected accounts?

Question

Quizplus · Accepted Answer

The write-off of uncollectible accounts affects only the balance sheet accounts related to receivables (Accounts Receivable and Allowance for Doubtful Accounts) and does not impact total assets or shareholders' equity because it involves shifting amounts within the assets without affecting the total value of assets or the equity.

Ace Computing Company on January 1, Year 1, the Accounts Receivable and the Receivable