Enterprises should set up the subject of "bad debt reserve" to account for the provision of bad debt reserve and the write-off of accounts receivable. The provision for bad debts made by an enterprise in the current period shall be included in the asset impairment loss. The "bad debt reserve" account of the lender registers the amount of bad debt reserve accrued in the current period, and the debit registers the amount of bad debt reserve offset by the actual bad debt loss. The ending balance is generally in the credit, which reflects the bad debt reserve that the enterprise has accrued but has not written off.
Accounts receivable that the enterprise really can't recover will be written off as bad debts after being approved by the management authority, and the accrued bad debt reserve will be offset. For accounts receivable that have been confirmed and written off, the book balance of bad debt reserve shall be increased according to the actual amount received. When the enterprise suffers bad debt losses, it shall debit the bad debt reserve account and credit the accounts receivable and other receivables.