On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $70,400 and $2,800, respectively. During the year Kincaid reported $187,000 of credit sales. Kincaid wrote off $1,700 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $222,300. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. Kincaid's entry required to recognize the uncollectible accounts expense for Year 2 will:

Multiple Choice

decrease total assets and increase retained earnings.

increase total assets and decrease net income.

increase total assets and retained earnings.

decrease total assets and net income.