What is the treatment for bad debts received.

Question

Accepted Answer

Bad debts received are written off as an expense in the income statement.

Bad debts are uncollectible debts that are written off as an expense in the income statement.
The amount of bad debts is subtracted from the accounts receivable balance.
The entry to write off bad debts is a debit to bad debt expense and a credit to accounts receivable.
The write-off of bad debts reduces the company's net income and assets.
Example: If a company has $10,000 in accounts receivable and $500 in bad debts, the accounts receivable balance will be reduced to $9,500.
Example: If a company has a bad debt expense of $1,000, the net income will be reduced by $1,000.

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