Sales on credit is a well known business method to eatn money. The credit sales is recognised when a successful transaction is happened At the close of the accounting period is termed as assets. But company do not know if the customer will pay or not. It is difficult to know how much money will be able to collect. Customer may pay the full amount or may pay a partial amount. A few amout may be completely uncollected. To overcome these problem the uncollected amount are record as a bad debt expanse.
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