Lail IncAccounts for Bad Debts Using the Allowance Method

Multiple Choice

Lail Inc.accounts for bad debts using the allowance method.On June 1,Lail Inc.wrote off Andrew Green's $2,500 account.Based on Lail's estimation,Andrew Green will never pay any portion of the balance in his account.What effect will this write-off have on Lail Inc.'s balance sheet at the time of the write-off?

A) An increase to stockholders' equity and a decrease to liabilities.
B) No effect.
C) An increase to assets and an increase to stockholders' equity.