Final answer:
Writing off the $200 uncollectible balance using the allowance method means both accounts receivable and the allowance for doubtful accounts are decreased by $200, but profit and the net realizable value of receivables remain the same, since the expense was recognized earlier when estimating the allowance.
Step-by-step explanation:
When Conroy Company writes off the $200 uncollectible balance for Alegia Co. using the allowance method, it affects their accounting records in specific ways.
At write-off, the accounts receivable and the allowance for doubtful accounts are both decreased by $200, reflecting the elimination of the receivable and the use of the allowance set aside for such uncollectible accounts. The adjustment ensures that the net realizable value of receivables reported on the balance sheet remains unchanged because the allowance for doubtful accounts had previously accounted for this potential loss. Therefore, the bad debts expense is not increased at the time of the write-off, as it would have been recognized earlier when the allowance was initially estimated based on expected future bad debts. This method aligns with the matching principle, where expenses are recorded in the same period as associated revenues.
Profit is not directly affected by the write-off because the impact of potential bad debts would have been previously recorded when estimating the allowance. The transaction to write off the uncollectible account would typically involve a debit to the allowance for doubtful accounts and a credit to accounts receivable, with no impact on profit at the time of write-off.