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When a business uses the direct write-off method, a journal entry is made when an account is written off, crediting Accounts Receivable and debiting Bad Debts Expense.
What is the bad debt expense taken into account?
A part of your accounts receivable that your company believes it will never be able to collect is known as a bad debt expenditure. Bad debt expenses, also known as doubtful debts, are reported as a negative transaction on the financial statements of your company. Every company has a unique method for designating unpaid accounts as bad debts.
What exactly falls under accounts receivable?
Customers' outstanding debts for goods or services they have received but haven't yet paid for are referred to as accounts receivable. For instance, the amount owing when clients buy things on credit is added to the accounts receivable.
Learn more about bad debts: https://brainly.com/question/15315644
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