Homework Answers
No effect on the accounting equation.
When it gets notice about that the customer will not pay the sum of money, the entry will be a debit to allowance for doubtful and a credit to accounts receivable. Here allowance of doubtful is a contra asset account and hence there will be no change in the accounting equation.
Hence, option C is the correct answer.
SUMMARY:
Option C is the correct answer.
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