What is the effect of the write off of bad debts (using the allowance method) on A net income and B accounts receivable, net.
The write-off of bad debts using the allowance method decreases the asset accounts receivable and the contra-asset allowance for doubtful accounts by the same amount. As a consequence, (a) net income is unaffected and (b) accounts receivable, net, is unaffected.
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