Question

When the allowance method of recognizing uncollectible accounts is used, how would the collection of an account previously written off affect accounts receivable and the allowance for uncollectible accounts?
a.No effect Decrease
b.No effect Increase
c.Increase Decrease
d.Increase No effect

Answer 1

Answer:

b.No effect Increase

Explanation:

accounts receivable                            xxx  

allowance for uncollectible accounts                       xxx

( to reinstate the account )  

Cash                                                        xxx  

accounts receivable                                                xxx

( to record the collection )

No effect on accounts receivable as it gets debited and credited with the same amount

it increases the allowance for uncollectible accounts as it is credited

Therefore,the collection of an account previously written off affect accounts receivable and the allowance for uncollectible accounts is b.No effect Increase