On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $65,400 and $1,700, respectively. During the year Kincaid reported $162,000 of credit sales. Kincaid wrote off $1,350 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $178,900. 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:

A. not affect total assets or stockholders equity.

B. increase total assets and stockholders equity.

C. increase total assets and decrease stockholders equity.

D. decrease total assets and stockholders equity.