Final answer:
Write-offs involve crediting the Allowance for Doubtful Accounts and debiting the Accounts Receivable, reducing the expected receivables as the bad debt is no longer anticipated to be collected. This reflects on the company's balance sheet but doesn't impact the net income immediately since the expense was already estimated.
Step-by-step explanation:
Write-offs are credits to the Allowance for Doubtful Accounts (ADA) and debits to gross Accounts Receivable (A/R). When an account is deemed to be uncollectible, a company will write-off the amount. The write-off requires two journal entries. First, the company will credit the ADA to reduce it because the company is no longer anticipating to collect this particular debt. The ADA is a contra-asset account, which means it carries a balance opposite of the balance of the account it offsets, which in this case is the Accounts Receivable (A/R). Second, the company will debit the A/R to decrease the amount of gross receivables on the balance sheet since the revenue previously recorded will not actually be collected. Overall, the write-off will have no immediate impact on the company's net income, since the expense was previously estimated and recorded when the ADA was initially established through a provision for doubtful accounts.