Lail Inc.accounts for bad debts using the allowance method.On June 1,Lail Inc.wrote off Andrew Green's $2,500 account.Based on Lail's estimation,Andrew Green will never pay any portion of the balance in his account.What effect will this write-off have on Lail Inc.'s balance sheet at the time of the write-off?

Question

Quizplus · Accepted Answer

Writing off Andrew Green's account will have no effect on Lail Inc.'s balance sheet as the allowance for bad debts would have already accounted for the potential loss from his account. The write-off simply confirms that the company has determined that the amount is uncollectible.

Lail IncAccounts for Bad Debts Using the Allowance Method