Accounting For Bad Debt Losses

Bad debts refer to accounts receivable that enterprises can not recover.

Losses arising from bad debts are called bad debt losses.

There are two ways to calculate bad debt loss, that is, direct selling method and reserve method.

(1) the direct selling method of the direct selling method is to confirm the loss of the bad account, to account for the period cost and cancel the account receivable when the bad account occurs.

If the write off account receivable has been repaid later, it will be borrowed: bank deposits, loans, accounts receivable, loans: accounts receivable at the same time: Borrowing: accounts receivable, loans: management fees, 2 yuan. The reserve method is to estimate the bad debt losses on time, and to prepare for bad debts. When all receivable accounts are recognized as bad debts, the allowance for bad debts should be deducted and the corresponding accounts receivable should be sold.

This way, on the one hand, it is estimated that the loss of bad debts is recorded in the management cost on a regular basis. On the one hand, the provision of "bad debt preparation" should be set up, and the amount of bad debt preparation and accounts receivable should be written off when the bad debts are actually incurred, so that the accounts receivable on the balance sheet reflect the net value of the estimated bad debts.

Loan: bad debt reserve: bad debt reserve: bad debt reserve: bad accounts receivable, accounts receivable, loss of bad debts that have been confirmed and refunded, if recovered later, borrow: accounts receivable loan: bad debt preparation: at the same time: borrow money from bank accounts: accounts receivable (3) three ways to calculate bad debt losses. When the bad debt is prepared, the management cost is bad.

At the end of the accounting period, the amount of bad debts prepared by an enterprise should be larger than the 100% of its account, and it should be extracted according to its balance.

The age analysis method is the method of estimating the loss of bad debts according to the length of account receivable.

Although the amount of accounts receivable can be recovered and how much can be recovered, it may not always depend on the length of time. Generally speaking, the longer the debits are defaulted, the greater the possibility of bad debts.

The sales percentage method is based on a certain percentage of the amount of credit sales to estimate the loss of bad debts.

The current industry system in China stipulates that enterprises adopting the method of accounts receivable balance percentage can prepare bad debts at the end of the year according to the 3-5 percentage of accounts receivable balance at the end of the year.