Write Off Bad Debt by Making an Allowance for a Bad Debt Account
You can account for bad debts by regularly making an allowance for bad debt. The benefit of this method is that you accrue for bad debt at the time of the sale.
As a typical function of accrual accounting, many companies accrue, each month, a bad debt expense amount. This amount is typically a percentage of the specific month’s sales (for example, 3% of sales).
To write off bad debt by making a bad debt allowance:
Parent Topic: How to...