Ophelia Inc. just learned that Patton Inc., one of its customers with an outstanding accounts receivable balance, filed for bankruptcy. Assuming that the company utilizes the allowance method, Ophelia should record a (n) :

decrease in Accounts Receivable.

Explanation:

Allowance method is an accounting method term for uncollectible accounts receivable. It allows for recording of estimated bad debt expense in the same period the loss occurred.

When there is a loss from accounts receivable allowance method is used to adjust accounts receivable.

In this instance Patton Inc. with an outstanding accounts receivable balance, filed for bankruptcy. So Ophelia will need to record a decrease in accounts receivable to indicate the loss.