Question

Grabbe enterprises uses the allowance method to account for uncollectible receivables. When an uncollectible account is written off, ________. The bad debt expense account is debited no entry is required because bad debt expense is estimated at the end of the accounting period the write off has no effect on net income the allowance for bad debts account is credited

Answer 1

Allowance Method:

Under the allowance method to account for uncollectible receivables, when an uncollectible account is written off, the Allowance for bad debts account is debited and Accounts receivable account is credited. This entry does not make any effect on the net income, because it does not recognizes an expense.

Hence the correct answer shall be:

-no effect on net income