Action abc must take is the Allowance for Doubtful Accounts.
An allowance for dubious bills is regarded a “contra asset,” due to the fact it reduces the amount of an asset, in this case the bills receivable. The allowance, from time to time known as a horrific debt reserve, represents management's estimate of the quantity of bills receivable that will no longer be paid by using customers
credit
The awful debt rate is entered as a debit to make bigger the expense, whereas the allowance for dubious bills is a savings to increase the contra-asset balance.
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