Tieppo Cycles Pty Ltd currently adopts the Direct Method to write-off a debt as uncollectable (bad debt). The company has decided to change its accounting policy to the Allowance Method. On 2 June 2020, Tieppo Cycles Pty Ltd deemed that Mr. Schofield could not pay a debt of $600 and the amount was written off as a bad debt. The journal entry to record the uncollectable amount was DR: Bad Debts $600 and CR: Accounts receivable Schofield $600. If the company now decides to adopt the Allowance Method with an opening balance in the Allowance for Doubtful Debts of $2,000 CR. The company now records the write-off of the bad debt under the Allowance Method and reverses the direct method write-off of the Schofield debt. What would be the impact on the financial reports if a change of accounting policy on 2 June 2020 was undertaken from the Direct Method to the Allowance Method? Group of answer choices

No impact on the current asset Accounts receivable, a decrease in the contra current asset Allowance for doubtful debts and a decrease in the expense account bad debts.

No impact on the current asset Accounts receivable, a decrease in the contra current asset Allowance for doubtful debts and an increase in the expense account bad debts.

Decrease in the current asset Accounts receivable and a decrease in the expense account bad debts

No impact on the current asset Accounts receivable, an increase in the contra current asset Allowance for doubtful debts and a decrease in the expense account bad debts.