On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $66,200 and $1900, respectively. During Year 2, Kincaid reported $166,000 of credit sales, wrote off $1400 of receivables as uncollectible, and collected cash from receivables amounting to $185,700. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.Which of the following describes the effects of Kincaid's entry to recognize the write-off of the uncollectible accounts?
A. Does not affect assets or stockholders' equity.
B. Increase assets and stockholders' equity.
C. Increase assets and decrease stockholders' equity.
D. Decrease assets and stockholders' equity.
Answer: A
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