bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt?…

What are the different ways to estimate bad debt? How does this affect net income? What does Generally Accepted Accounting Principles (GAAP) require? Why? Should all companies have bad debt? Explain your answer.

Solution;The bad debts are estimated by using allowance method and by direct write off method. Under theallowance method, the company sets an approximate percentage on the accounts recievables…