multiple choice question conroy company uses the allowance method to account for bad debts. during the year…
multiple choice question conroy company uses the allowance method to account for bad debts. during the year, conroy determined that a balance of $200 from alegia co. was uncollectible and wrote the balance off. what is the total decrease to net income related to this entry? cannot be determined $200 $0
Answer
Explanation:
Step1: Understand allowance - method entry
When writing off a bad - debt under the allowance method, the journal entry is: Debit Allowance for Doubtful Accounts and Credit Accounts Receivable.
Step2: Analyze impact on net income
The allowance for doubtful accounts is a contra - asset account, and this write - off does not directly affect the income statement. The expense related to bad debts was already recognized when the allowance was initially estimated and recorded as Bad Debt Expense. So, writing off a specific uncollectible account has no impact on net income.
Answer:
$0