[agripper]

Bee Co. uses the direct write-off method to account for uncollectible accounts receivable. During an accounting period, Bee’s cash collections from customers equal sales adjusted for the addition or deduc­tion of the following amounts:

Correct A.

Accounts written off: deduction; Increase in accounts receivable balance: deduction

B.

Accounts written off: addition; Increase in accounts receivable balance: deduction

C.

Accounts written off: deduction; Increase in accounts receivable balance: addition

D.

Accounts written off: addition; Increase in accounts receivable balance: addition

You are correct, the answer is A.

This question is asking to convert from sales during the period to cash collections. Since the company uses the direct write-off method, there is no need to consider any allowance account balance. Thus, the sales for the period only have to be adjusted downwards for any accounts written off, and also downwards for any increases in deferred receipts (in the form of additions to accounts receivables).