Ace Computing Company
On January 1, the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were $500 of receivables written off as uncollected during the year. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
Refer to the Ace Computing Company. The entry to recognize the write-off of the specific uncollected accounts will act to
A. increase total assets and stockholders' equity.
B. increase total assets and decrease stockholders' equity.
C. decrease total assets and stockholders' equity.
D. not affect total assets or stockholders' equity.
Answer: D
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