OTC accounts for bad debts using the allowance method. On July 1, OTC wrote off Timothy Walker's $1,500 account. Based on OTC's estimation, Timothy Walker will never pay any portion of the balance in his account. What effect will this write-off have on OTC's balance sheet at the time of the write-off? No effect. A decrease to assets and a decrease to stockholders' equity. An increase to assets and an increase to stockholders' equity. An increase to stockholders' equity and a decrease to liabilities