Question: Cupcakes Inc. accounts for bad debts using the allowance method. On June 1, Cupcakes Inc. wrote off Andrew Greens $2,500 account. Based on Cupcakess estimation,

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

A)	an increase to stockholders equity and a decrease to liabilities

B)	an increase to assets and an increase to stockholders equity

no effect

D)	a decrease to assets and a decrease to stockholders equity

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