(2)AccountingofUncollectibleReceivables-Bad DebtsDefinitionAllreceivablesshallbeclearedandcollectedontimeandshallbe checked withrelated parties periodically.Regardless of thecaution used ingranting creditand the collection proceduresused, a part of the credit sales may still become uncollectibleThis is calledbad debtsAccountUsedProvisionforBadDebts坏账准备 It is a deduction item of accounts receivable in the financialstatement.112025/12/3
11 2025/12/3 (2)Accounting of Uncollectible Receivables -Bad Debts Definition ⚫ All receivables shall be cleared and collected on time and shall be checked with related parties periodically. Regardless of the caution used in granting credit and the collection procedures used, a part of the credit sales may still become uncollectible. This is called bad debts. Account Used ⚫ Provision for Bad Debts 坏账准备 ⚫ It is a deduction item of accounts receivable in the financial statement
Anyaccountsreceivable,provedtobedefinitelyuncollectible, shall be recognized as bad debts andwritten off against provision for bad debts orcharged tocurrentprofit orlossAny subsequent recoveries for bad debts written offshall be credited to the provision of bad debtsHowtorecord bad debts122025/12/3
12 2025/12/3 ⚫ Any accounts receivable, proved to be definitely uncollectible, shall be recognized as bad debts and written off against provision for bad debts or charged to current profit or loss. ⚫ Any subsequent recoveries for bad debts written off shall be credited to the provision of bad debts. ⚫ How to record bad debts
BadDebts1.Direct Write-2.AllowanceoffMethodMethod132025/12/3
13 2025/12/3 Bad Debts 1.Direct Writeoff Method 2. Allowance Method
WRITEOFFSALESTOEXPENSEDIRECTWRITEOFF METHODYEARYEARYEARYEARExpenseRevenueRecognitionRecognition
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EXPENSEFORESTIMATEOFUNCOLLECTIBLESWRITEOFFSALESAGAINSTALLOWANCEALLOWANCEMETHODSYEARYEARYEARYEARRevenueandExpenseRecognition
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