Final answer:
Without a specified method to calculate the bad debts expense, we cannot give a precise amount. But, conceptually, the net accounts receivable is calculated by subtracting bad debts from the total accounts receivable, the percentage of bad debts to total revenues is found by dividing the bad debt expense by total revenues, and recognizing bad debts on the income statement reduces net income.
Step-by-step explanation:
To calculate the bad debts expense for Business Solutions without additional information such as historical bad debt percentages or industry averages, we would typically need to make an assumption or use a method like the percentage of sales method or the accounts receivable aging method. Since no specific percentage or method has been provided in the question, we cannot give a precise dollar amount for the bad debts expense. However, we can still address parts b, c, and d conceptually.
b) Calculating the net accounts receivable would involve subtracting the bad debts expense from the total accounts receivable of $22,017 once it is determined.
c) To determine the percentage of bad debts to total revenues, you would divide the bad debts expense by the total revenues of $52,000 and multiply by 100.
d) The impact on the income statement of recognizing bad debts expense would be to reduce net income. Bad debts expense is a contra account to accounts receivable and is reported as an operating expense on the income statement, decreasing total net income.