Question: 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,

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.

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

C) An increase to assets and an increase to stockholders' equity.

B) None of the above.

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