On June 20, 2018, Jarden Company concludes that a customer's $4,750 receivable (created in 2017) is...
On June 20, 2018, Jarden Company concludes that a customer's $4,750 receivable (created in 2017) is uncollectible and that the account should be written off. What effect with this action have on Jarden's 2018 net income? Explain.
Homework Answers
Effect of bad debts on Net Income:
Net income reduces by $4,750 for the year 2018.
Reason:
When initially credit sales made revenue and respective profit for that year 2017 increases by $4,750 but later when that amount becomes bad debts again the same amount should be charged as expenses in the year it becomes bad debt
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