A company uses the allowance method to recognize uncollectible accounts expense. What is the effect at the time of the collection of an account previously written off on each of the following accounts? Allowance for

 A company uses the allowance method to recognize uncollectible accounts expense. What is the effect at the time of the collection of an account previously written off on each of the following accounts?
Allowance for

uncollectible accounts
Uncollectible accounts

expense
No effect
Decrease
Increase
Decrease
Increase
No effect
No effect
No effect

Answer 

Increase , No effect

 
 You Answered Correctly!
When an account receivable that was previously written off is collected, two entries must be made. The first entry reverses the write-off and reestablishes the receivable.

DR: Accounts receivable    xxx    
     CR: Allowance for uncollectible accounts        xxx
The second entry records the cash receipt.

DR: Cash    xxx    
     CR:Accounts receivable        xxx
The credit to the allowance account in the first entry increases its balance. Uncollectible accounts expense, however, is not affected by this transaction.