What is the effect of debiting allowance for doubtful debts?

The IRS is way ahead of you. Although businesses may use the allowance method for their own internal purposes, they must use the direct write-off method for income tax purposes. This means a Bad Debt expense isn't recorded until an account is actually written off (Dr Bad Debt Expense, Cr Accounts Receivable). So it looks like the IRS foresaw some businesses inflating their allowance account just for the reason you stated.