Bad debt provision is an asset account, and it is an allowance account for accounts receivable and other receivables. When an enterprise withdraws bad debts, it should debit the subject of "credit impairment loss-bad debt reserve"; Credit the bad debt reserve account. The calculation formula of bad debt reserve is: bad debt reserve payable in this period = bad debt reserve payable in this period according to accounts receivable-credit balance of bad debt reserve in this period.

Accounts receivable that are irrecoverable shall be treated as bad debts after being approved according to the management authority, and the accounts receivable shall be written off and debited to the subject of "bad debt reserve"; Credit accounts such as notes receivable, accounts receivable, prepayments, other receivables and long-term receivables.

When the accounts receivable that have been confirmed as bad debt losses and written off are recovered in whole or in part in the future, the accounts receivable, bills receivable, prepayments, other receivables and long-term receivables shall be debited according to the actual recovered amount and credited to the bad debt reserve account; At the same time debit "bank deposit" and other subjects; "Accounts receivable" and other credit accounts.

Provision method for bad debts:

1, balance percentage method.

This is a method to estimate the loss of bad debts according to a certain proportion of the balance of accounts receivable at the end of the period. Under the balance percentage method, an enterprise should estimate the balance of the bad debt reserve account at the end of each accounting period according to the ending balance of accounts receivable and the corresponding bad debt rate. The difference between it and the existing balance of the bad debt reserve account before adjustment is the amount of bad debt reserve that should be accrued in the current period.

2. Aging analysis method.

This is a method to estimate the loss of bad debts according to the age of accounts receivable. Generally speaking, the longer the accounts receivable, the greater the possibility of bad debts. Therefore, the accounts receivable of enterprises are grouped by age, and different accrual ratios are determined to estimate bad debt losses, so that the calculation results of bad debt losses are more in line with the objective situation.

3. Percentage of sales.

This is a method to estimate the loss of bad debts according to a certain proportion of the total sales of enterprises. The percentage is determined according to the relationship between the actual bad debts and the total sales of the enterprise in the past and the changes in production, operation and sales policies. In practical work, enterprises can also estimate the loss of bad debts according to the percentage of credit sales.