Gross sales	$1,000,000
Less: discounts	11,880
Net sales	$988,120
Production costs	750,000
Pre tax op. profit	$238,120
Carrying costs	3,699
Bad debt losses	10,000
Profit before taxes	$224,421
Taxes	89,769

Due to the macroeconomic condition, bad debt losses increase to $20,000. What is the effect of this macroeconomic condition on Net Income?

Group of answer choices

The Net Income will increase by $10, 000.

The Net Income will decrease by $20, 000.

The Net Income will increase by $20, 000.

The Net Income will decrease by $10, 000.