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Bad debts written off

For example, if your company’s average DSO is 75 days, you might decide that after an additional 90 or 120 days, the debt should be sent to collections and written off.

. And this, in turn, is subtracted from the Balance sheet Current assets category Accounts receivable. Allowance method.

To write off bad debt, you need to remove it from the amount in your accounts receivable.

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You can deduct qualifying business bad debt either in part or full from your gross income when figuring taxable income. Debit.

This method results in an accurate amount written off as bad debts.

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