The writing off of customer's write off impacts the company's financial statements as follows:
On the balance sheet, the bad debt write-off enters the account Allowance for doubtful accounts which is subtracted from the asset account. Accounts receivable.
On the income statement the bad debt expense normally appears along with other expenses under operating expenses, below the gross profit line.
On the statement of changes in financial position (financial accounting cash flow statement), bad debt expense will be
listed as a non cash expense, decreasing the total sales revenues cash
contribution to net cash flow.
Hope this helps :)
Nov 25th, 2014
Did you know? You can earn $20 for every friend you invite to Studypool!