Allowance Method

CheriNC · #1 Apr 18, 2007, 04:19 PM

Under the allowance method of recognizing uncollectible accounts, the entry to write off an uncollectible account does what?

1) increases the allowance for uncollectible accounts
2) has no effect on the allowance for uncollectible accounts
3) increases net income
4) decreases net income
5) has no effect on net income

I am proposing either #2 or #5, anyone have a better idea?

Thanks.

Smith21000 · Apr 19, 2007, 05:54 AM

5 is the answer. The entry would be as follows:

Allowance XXX
Accounts Rec. XXX



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