Question How does the write-off of anuncollectible account receivable and the re

Question

Question

How does the write-off of anuncollectible account receivable and the recovery of a previouslywritten-off account
receivable effect net income?

A)

write-offshave no effect on net income; recoveries have no effect on netincome

B)

write-offshave no effect on net income; recoveries decrease net income

C)

write-offsdecrease net income; recoveries decrease net income

D)

write-offshave no effect on net income; recoveries increase net income

E)

write-offsdecrease net income; recoveries have no effect on net income

Question

Explanation / Answer

A. write -offs have no effect on net income; recoveries have noeffect on net income. Explanation 1.Journal for write -off Allowance for doubtful accounts    xxx         Accountsreceivable                      xxx Both of the above items comes in the Balance sheet and so there isno effect on net income. 2.Journal for recovery of a previously written-off reverse the entries A/ R          xxx Allowance for doubtfulaccounts        xxx Cash           xxx   A/R                 xxx

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.