What is the effect of the write-off of uncollectible accounts (using the Allowance Method) on: a. Net Income
b. Net Accounts Receivable

a. Decreases the net income

b. Decreases the Net account receivable balance

Explanation:

To write off the uncollectible account we pass the following journal entry

Dr. Allowance for doubtful accounts $x,xxx

Cr. Accounts receivables                    $x,xxx

The above entry has the following impacts.

a.

It decreases the net income value as the Allowance for uncollectible account balance reduces as a result. At the end of the period the adjustment of Allowance uncollectible accounts of increases which is recorded as below

Dr. Bad Debt Expense                               $x,xxx

Cr. Allowance for uncollectible accounts $x,xxx

b.

It decreases the accounts receivable balance as we credit the account receivable balance to remove the outstanding balance of uncollectible accounts.

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