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 Year 2, Kincaid reported $72,500 of credit sales, wrote off $550 of receivables as uncollectible, and collected cash from receivables amounting to $74,550. 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?