Question

Janes Company follows the procedure of estimating its bad debts from credit sales. Recently, the company evaluated all of its trade accounts receivable balances and wrote off $32,000 worth of accounts that were considered to be uncollectible. Just prior to this write-off, the allowance for doubtful accounts account had a credit balance of $164,000. The effect of this write-off on the financial statements was to:

a) decrease total current assets by $32,000

b) increase company expenses by $132,000

c) increase company expenses by $32,000

d) leave the balance of total current assets unchanged

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

А B C E F D Answer 3 The correct answer is 4 D) leave the balance of total current assets unchanged 5 6 Explanation In balance sheet, The account receivable balance is shown net of allowance for doubtful accounts balance. When companies wrote of account receivable, it will debit allowance for doubtful debt and credit account receivable account. So there is be effect on individual accounts but since they are shown net in balance, so the total current assets will remain unchanged