In the financial management of enterprises, in order to deal with the possible risk of bad debts, the balance percentage method is often used to make provision for bad debts. This method is mainly based on the balance of the customer's accounts receivable, and estimates the possible bad debt loss according to a certain percentage. Here are the detailed steps of the method:
Determine the percentage of bad debt provisionsAccording to the historical bad debt rate of the enterprise, the credit status of customers and the characteristics of the industry, determine a reasonable bad debt provision percentage.
Calculate accounts receivable balances: Count the balance of accounts receivable of each customer to ensure the accuracy and timeliness of the data.
Calculate the amount of provision for bad debts: Multiply the accounts receivable balance by the determined percentage to arrive at the amount of bad debt provision accrued.
Accounting entries are recorded: In the accounting records of the enterprise, the calculated amount of bad debt provision is included in the current profit or loss as an expense, and the balance of the bad debt provision account is increased at the same time.
Periodic assessment and adjustment: Regularly assess the reasonableness of the bad debt provision percentage as time and market environment change, and adjust it as needed.
Through these steps, enterprises can make more scientific and accurate provisions for bad debts, so as to effectively deal with potential bad debt risks.