Final answer:
The write-off of a receivable reduces the amount of the Allowance for Bad Debits account.
Step-by-step explanation:
The correct answer is B) reduces the amount of the Allowance for Bad Debits account. When using the allowance method, a company estimates the amount of bad debts that will arise from its credit sales. This estimate is recorded in the Allowance for Bad Debits account. When a receivable is determined to be uncollectible, it is written off by reducing the amount in the Allowance for Bad Debits account. This reduces the company's estimate of bad debts and properly reflects the decrease in the realizable value of the receivable.