what is the effect of the write-off of bad debts on net income and on net accounts receivable??

Answer 1

When you write off a bad debt, you:
Dr Bad debt written off (expense item)
Cr Accounts receivable (asset item)

The effect is to decrease net income and decrease accounts receivable. That is why companies must be careful in granting credit to customers. They must assess the customers carefully and set credit limits for each customer.

Answer 2

Entry to record direct write off method is; Dr. Bad debt expense Cr. Accounts Receivable Answer is decrease the accounts receivable balance and decrease net income. Expense was increased thus decreasing the net income. Accounts receivable was decreased. AR normal balance is DEBIT since it was credited in this entry then there was a decrease in value.

Answer 3

the purpose is to offset tax liability.