What are the effects on the accounting equation when a company makes the adjustment to record bad debt expense?
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What are the effects on the accounting equation when a company makes the adjustment to record bad debt expense using the allowance method? A) Assets and owners' equity increase. B) Assets and owners' equity decrease. C) Assets increase and owners' equity decreases. D) Assets decrease and owners' equity increases.
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Answer:
B Example..b/4 bad debt expense: Assets 100 Liabs: 25 Equity: 75 record bad debt allowance of 10... Assets: (net) 90 Liabs: 25 Equity: 65
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