Company's Accounts...

On January $1,$ Year $2,$ Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $$31,000$ and $$500,$ respectively. During the year Kincaid reported $$72,500$ of credit sales. Kincaid wrote off $$550$ of receivables as uncollectible in Year $2.$ Cash collections of receivables amounted to $$74,550.$ Kincaid estimates that it will be unable to collect one percent $(1\%)$ of credit sales.

Kincaid's entry to recognize the write$-$off of the uncollectible accounts will:

Multiple Choice

not affect total assets or stockholders' equity.

increase total assets and decrease stockholders' equity.

increase total assets and stockholders' equity.

decrease total assets and stockholders' equity.