Firm F is a cash basis legal firm. In 2017, it performed services for a client, mailed the client a bill for $6,150, and recorded a $6,150 receivable. In 2018, Firm F discovered that the client was under criminal indictment and had fled the country. After learning this news, it wrote off the receivable.
a. What was the effect of the recording of the account receivable on Firm F's taxable income?
b. What was the effect of the write-off on Firm F's taxable income?