In 2009 u decide a customer's $30 receivable (created in 2008) is uncollectible and should be written off.

Question

What effect will this action have on your company's 2009 net income.

Answer 1

This write-off in 2009 will cause 2009's net income to be $30 less than what it would have been without the write-off. You adjust it in 2009 because in 2008 when the sale was just made, there would have been no basis to write off the debt.

Answer 2

You had it carried as a 2008 receivable in 2008 and in 2009...when you write it off, 2009 drops 30.