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\"how<\/p>\n

Once the percentage is determined, it is multiplied by the total credit sales of the business to determine bad debt expense. A bad debt expense is a financial transaction that you record in your books to account for any bad debts your business has given up on collecting. Companies write off or deduct business bad debts in the year they become worthless. This occurs when the business no longer reasonably expects payment on the debt. Recording uncollectible debts will help keep your books balanced and give you a more accurate view of your accounts receivable balance, net income, and cash flow.<\/p>\n<\/p>\n